-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UhM1fFCaVEry5ClryIdp5UzVKSEgwA9EVEkM/sb9AGTyhBXuWDaqNTgUba8PMOuf YnlCcrhNgyeMMAQCT4JFTQ== 0001047469-99-032325.txt : 19990817 0001047469-99-032325.hdr.sgml : 19990817 ACCESSION NUMBER: 0001047469-99-032325 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOYKIN LODGING CO CENTRAL INDEX KEY: 0001015859 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 341824586 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11975 FILM NUMBER: 99691543 BUSINESS ADDRESS: STREET 1: GUILDHALL BLDG 45 W PROSPECT AVE STREET 2: SUITE 1500 CITY: CLEVELAND STATE: OH ZIP: 44115 BUSINESS PHONE: 2164301200 MAIL ADDRESS: STREET 1: GUILDHALL BLDG 45 W PROSPECT AVE STREET 2: SUITE 1500 CITY: CLEVELAND STATE: OH ZIP: 44115 FORMER COMPANY: FORMER CONFORMED NAME: BOYKIN LODGING TRUST INC DATE OF NAME CHANGE: 19960604 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 Commission file number 001-11975 BOYKIN LODGING COMPANY (Exact Name of Registrant as Specified in Its Charter) Ohio 34-1824586 - ------------------------------------- --------------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) Guildhall Building, Suite 1500, 45 W. Prospect Avenue Cleveland, Ohio 44115 - --------------------------------------- -------------------------------------- (Address of Principal Executive Office) (Zip Code) (216) 430-1200 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No _____ The number of common shares, without par value, outstanding as of August 13, 1999: 17,146,209 PART I ITEM 1. FINANCIAL STATEMENTS BOYKIN LODGING COMPANY INDEX TO FINANCIAL STATEMENTS BOYKIN LODGING COMPANY: Consolidated Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998................................................ 3 Consolidated Statements of Income for the Three and Six Months Ended June 30, 1999 and 1998 (unaudited)............................. 4 Consolidated Statement of Shareholders' Equity for the Six Months Ended June 30, 1999 (unaudited)...................................... 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 (unaudited)............................. 6 Notes to Consolidated Financial Statements................................ 7 BOYKIN MANAGEMENT COMPANY LIMITED LIABILITY COMPANY AND SUBSIDIARIES: Consolidated Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998................................................ 12 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1999 and 1998 (unaudited)............................. 13 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 (unaudited)............................. 14 Notes to Consolidated Financial Statements................................ 15
BOYKIN LODGING COMPANY CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1999 AND DECEMBER 31, 1998 (DOLLAR AMOUNTS IN THOUSANDS)
(Unaudited) June 30, December 31, 1998 1999 ----------- ------------ ASSETS Investment in hotel properties, net $594,271 $595,132 Cash and cash equivalents 2,170 5,643 Rent receivable from lessees: Related party lessees 8,958 4,748 Third party lessees 1,667 547 Deferred expenses, net 3,331 3,159 Restricted cash 3,029 4,330 Other assets 1,330 1,503 --------- --------- $614,756 $615,062 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Borrowings against credit facility $163,000 $156,000 Term note payable 130,000 130,000 Accounts payable and accrued expenses 8,363 6,521 Dividends/distributions payable 8,665 8,618 Due to lessees: Related party lessees 802 2,971 Third party lessees 1,329 1,775 Minority interest in joint ventures 11,287 11,251 Minority interest in operating partnership 11,140 11,710 Shareholders' equity: Preferred shares, without par value; 10,000,000 shares authorized; no shares issued and outstanding -- -- Common shares, without par value; 40,000,000 shares authorized; 17,144,082 and 17,044,361 shares outstanding June 30, 1999 and December 31, 1998, respectively, -- -- Additional paid-in capital 309,402 307,512 Retained deficit (27,960) (21,296) Unearned compensation - restricted shares (1,272) -- --------- --------- Total shareholders' equity 280,170 286,216 --------- --------- $614,756 $615,062 --------- --------- --------- ---------
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. 3 BOYKIN LODGING COMPANY CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED, AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
Three Months Ended Six Months Ended June 30, June 30, ---------------------- --------------------- 1999 1998 1999 1998 ------- ------- ------- ------- Revenues: Lease revenue from related party $19,547 $13,955 $35,168 $22,601 Other lease revenue 4,305 3,409 8,078 5,622 Interest income 95 128 163 182 ------- ------- ------- ------- 23,947 17,492 43,409 28,405 ------- ------- ------- ------- Expenses: Real estate related depreciation and amortization 7,107 5,096 14,247 8,316 Real estate and personal property taxes, insurance and ground rent 2,873 2,036 5,470 3,560 General and administrative 1,575 1,103 3,002 1,901 Interest expense 5,005 2,583 9,983 3,751 Amortization of deferred financing costs 159 145 318 275 ------- ------- ------- ------- 16,719 10,963 33,020 17,803 ------- ------- ------- ------- Income before minority interests and extraordinary item 7,228 6,529 10,389 10,602 Minority interest in joint ventures (219) (201) (332) (245) Minority interest in operating partnership (478) (470) (644) (850) ------- ------- ------- ------- Income before extraordinary item 6,531 5,858 9,413 9,507 ------- ------- ------- ------- Extraordinary item- Loss on early extinguishment of debt, net of minority interest of $110 -- (1,138) -- (1,138) ------- ------- ------- ------- Net income applicable to common shares $6,531 $4,720 $9,413 $8,369 ------- ------- ------- ------- ------- ------- ------- ------- Earnings per share: Basic $.38 $.31 $.55 $.63 Diluted $.38 $.31 $.55 $.62 Weighted average number of common shares outstanding: Basic 17,082 15,412 17,065 13,388 Diluted 17,082 15,436 17,065 13,462
The accompanying notes to consolidated financial statements are an integral part of these statements. 4 BOYKIN LODGING COMPANY CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED, DOLLAR AMOUNTS IN THOUSANDS)
Unearned Additional Compensation Common Paid-In Retained Restricted Shares Capital Deficit Shares Total ---------- -------- --------- ------- -------- Balance, December 31, 1998 17,044,361 $307,512 $(21,296) $ -- $286,216 Issuance of common shares 99,721 1,390 -- (1,390) -- Issuance of share warrant -- 500 -- -- 500 Dividends declared -- -- (16,077) -- (16,077) Amortization of unearned compensation -- -- -- 118 118 Net income -- -- 9,413 -- 9,413 ---------- -------- -------- ------- -------- Balance, June 30, 1999 17,144,082 $309,402 $(27,960) $(1,272) $280,170 ---------- -------- -------- ------- -------- ---------- -------- -------- ------- --------
The accompanying notes to consolidated financial statements are an integral part of this statement. 5 BOYKIN LODGING COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED, AMOUNTS IN THOUSANDS)
1999 1998 ---------- ---------- Cash flows from operating activities: Net income $ 9,413 $ 8,369 Adjustments to reconcile net income to net cash flow provided by operating activities- Extraordinary item-noncash loss on early extinguishment of debt -- 1,138 Depreciation and amortization 14,565 8,591 Amortization of unearned compensation 118 -- Minority interests 976 1,095 Changes in assets and liabilities- Rent receivable (5,330) (5,726) Restricted cash 1,301 -- Other 96 689 Accounts payable and accrued expenses 1,842 3,389 Due to lessees (2,615) 308 -------- --------- Net cash flow provided by operating activities 20,366 17,853 -------- --------- Cash flows from investing activities: Acquisitions of Red Lion Inns Operating L.P., net of commonshares issued of $80,333 and cash acquired of $11 -- (191,004) Acquisition of hotel properties, net of joint venture contribution -- (76,288) Improvements and additions to hotel properties, net (13,281) (17,563) -------- --------- Net cash flow used for investing activities (13,281) (284,855) -------- --------- Cash flows from financing activities: Payments of dividends and distributions (17,243) (12,100) Borrowings against credit facility 7,000 148,200 Repayment of borrowings against credit facility -- (96,750) Term note borrowing -- 130,000 Payment of deferred financing costs (520) (2,975) Net proceeds from issuance of common shares -- 104,563 Proceeds from issuance of share warrant 500 -- Distributions to joint venture minority interest partners, net (295) (138) Cash payments for redemption of certain limited partnership interests -- (967) -------- --------- Net cash flow (used for) provided by financing activities (10,558) 269,833 -------- --------- Net change in cash and cash equivalents (3,473) 2,831 Cash and cash equivalents, beginning of period 5,643 1,855 -------- --------- Cash and cash equivalents, end of period $ 2,170 $ 4,686 -------- --------- -------- ---------
The accompanying notes to consolidated financial statements are an integral part of these statements. 6 BOYKIN LODGING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1999 (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) 1. BACKGROUND: Boykin Lodging Company is a real estate investment trust that owns hotels throughout the United States and leases its properties to established hotel operators. Boykin's principal source of revenue is lease payments from lessees pursuant to percentage lease agreements. Percentage lease revenue is based upon the room, food and beverage and other revenues of Boykin's hotels. The lessees' ability to make payments to Boykin pursuant to the percentage leases is dependent primarily upon the operations of the hotels. INITIAL PUBLIC OFFERING AND MAJOR EVENTS SINCE THE IPO In November 1996, Boykin completed its initial public offering ("IPO"), issuing a total of 9,516,250 common shares, including exercise of the underwriters' over-allotment option. In conjunction with its IPO, Boykin Lodging contributed approximately $133,898 to Boykin Hotel Properties, L.P., an Ohio limited partnership (the "Partnership"), in exchange for an approximate 84.5% equity interest as the sole general partner of the Partnership and also loaned $40,000 to the Partnership in exchange for an intercompany convertible note. The Partnership then acquired nine hotel properties and leased them to Boykin Management Company Limited Liability Company ("BMC"). BMC is owned by Robert W. Boykin, Chairman, President and Chief Executive Officer of Boykin Lodging Company (53.8%) and his brother, John E. Boykin (46.2%). The Partnership acquired eight additional hotel properties in 1997 using remaining proceeds from the IPO and borrowings under Boykin's credit facility. On February 24, 1998, Boykin completed a follow-on public equity offering, issuing an additional 4,500,000 common shares. The net proceeds of approximately $106,313 were contributed to the Partnership, increasing Boykin Lodging Company's ownership percentage therein to 90.3%. The proceeds were used by the Partnership to pay down existing indebtedness under the credit facility, purchase limited partnership units from two unaffiliated limited partners, fund the acquisitions of two hotels purchased in March 1998 and for general corporate purposes. On May 22, 1998 Boykin completed its merger with Red Lion Inns Limited Partnership, in which Boykin acquired Red Lion Inns Operating L.P. ("OLP"), which owns a portfolio of ten DoubleTree-licensed hotels. In the transaction, Boykin issued 3,109,606 million common shares and paid approximately $35,305 in cash to the Red Lion limited partners and general partner. The total consideration value, including assumed liabilities of approximately $155,710 and common shares issued valued at $80,333, was $271,348. The common shares issued in the merger were valued at $25.83 per share, the five-day average trading price of Boykin's shares before the merger announcement. The issuance of Boykin's common shares in the merger increased Boykin Lodging's ownership percentage in the Partnership to 92.2%. As part of Boykin's acquisitions in 1997 and 1998, Boykin established new strategic alliances with four hotel operators and purchased five hotels with them through joint venture structures. The following table sets forth the joint venture agreements established in 1997 and 1998: 7
Boykin Lessee/JV Lessee/JV Ownership Ownership Date of Hotel Name of Joint Venture Partner Percentage Percentage Hotel Owned Under Joint Venture Purchase --------------------- ------- ---------- ---------- ------------------------------- -------- BoyStar Ventures, L.P. MeriStar 91% 9% Holiday Inn Minneapolis West July 1997 Shawan Road Hotel L.P. Davidson 91% 9% Marriott's Hunt Valley Inn July 1997 Boykin San Diego LLC Outrigger 91% 9% Hampton Inn San Diego Airport/Sea World November 1997 Boykin Kansas City LLC MeriStar 80% 20% DoubleTree Kansas City November 1997 RadBoy Mt. Laurel LLC Radisson 85% 15% Radisson Hotel Mt. Laurel June 1998
As of June 30, 1999 Boykin owned 31 hotels containing a total of 8,689 guest rooms located in 16 different states. BASIS OF PRESENTATION Boykin Lodging exercises unilateral control over the Partnership. Therefore, the separate financial statements of Boykin Lodging, the Partnership, OLP, and the joint ventures discussed above are consolidated. All significant intercompany transactions and balances have been eliminated. These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month period ended June 30, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. For further information, refer to the consolidated financial statements and footnotes thereto included in Boykin's annual report on Form 10-K for the year ended December 31, 1998. RECLASSIFICATIONS Certain reclassifications have been made to the prior year financial statements to conform with the current year presentation. 2. JOINT VENTURE WITH AEW: On February 1, 1999, Boykin formed a joint venture with AEW Partners III, L.P. ("AEW"), an investment partnership managed by AEW Capital Management, L.P., a Boston-based real estate investment firm. AEW will provide $50,000 of equity capital for the joint venture, and Boykin will provide approximately $17,000 and serve as the operating member of the joint venture. Due to its ownership interest of 25% in the joint venture, Boykin accounts for its investment utilizing the equity method. Boykin and AEW plan to use the joint venture to take advantage of acquisition opportunities in the lodging industry. The joint venture agreement contains provisions for AEW and Boykin to double their respective capital commitments under certain circumstances. In addition, as part of the transaction, Boykin will receive incentive returns based on the performance of acquired assets as well as other compensation as a result of the joint venture's activities. After the end of the two-year investment period, AEW has the option to convert its capital invested in the joint venture into Boykin convertible preferred shares. Pursuant to the venture agreements, AEW also purchased a warrant for $500. The warrant gives AEW the right to buy up to $20,000 of Boykin's preferred or common shares (at Boykin's election) for $16.48 a share. The warrant is exercisable after the two-year investment period, and expires one year after it becomes exercisable. The amount of the warrant will be reduced and eliminated under the terms of the agreement on a dollar for dollar basis as the last $20,000 of AEW's $50,000 of capital is invested. If issued, the preferred shares would be convertible into common shares at $16.48 per common share and have a minimum cumulative annual dividend equivalent to $1.88 per common share, Boykin's current common share dividend. As of June 30, 1999 there were no acquisitions made nor operations related to the joint venture. 8 3. NET INCOME PER SHARE AND PARTNERSHIP UNIT: Boykin Lodging's basic and diluted earnings per share for the three and six months ended June 30, 1999 under SFAS No. 128, "Earnings per Share" are as follows:
Three Months Ended Six Months Ended June 30, 1999 June 30, 1999 ------------- ------------- 1999 1998 1999 1998 -------- -------- -------- -------- Basic earnings per common share $ .38 $ .31 $ .55 $ .63 Diluted earnings per common share $ .38 $ .31 $ .55 $ .62
Basic earnings per share is based on the weighted average number of common shares outstanding during the period. Diluted earnings per share adjusts the weighted average shares outstanding for the effect of all dilutive securities. At June 30, 1999 and 1998, a total of 1,291,000 limited partnership units were issued and outstanding. The basic and diluted weighted average number of common shares and limited partnership units outstanding for the three and six months ended June 30, 1999 was 18,374,000 and 18,356,000, respectively. 4. CREDIT FACILITY: Boykin has an unsecured credit facility with a group of banks which, effective April 1, 1999, enables Boykin to borrow up to $200,000, subject to borrowing base and loan-to-value limitations, at a rate of interest that fluctuates at LIBOR plus 1.40% to 2.25% (6.7% at June 30, 1999), as defined. Boykin is required to pay a .25% fee on the unused portion of the credit facility. The credit facility expires in June 2000, with an additional one-year extension at Boykin's option. As of June 30, 1999 and December 31, 1998, outstanding borrowings against the credit facility were $163,000 and $156,000, respectively. The credit facility requires Boykin, among other things, to maintain a minimum net worth, a coverage ratio of EBITDA to debt service, and a coverage ratio of EBITDA to debt service and fixed charges. Further, Boykin is required to maintain the franchise agreement at each hotel and to maintain its REIT status. Boykin was in compliance with its covenants at June 30, 1999 and December 31, 1998. 5. TERM NOTE PAYABLE: On May 22, 1998, OLP entered into a $130,000 term loan agreement. The loan expires in June 2023 and may be prepaid without penalty or defeasance after May 21, 2008. The loan bears interest at a fixed rate of 6.9% for ten years, and at a new fixed rate to be determined thereafter. The loan requires interest-only payments for the first two years, with principal repayments commencing in the third loan year based on a 25-year amortization schedule. The loan is secured by ten DoubleTree hotels. Under covenants in the loan agreement, assets of OLP are not available to pay the creditors of any other Boykin entity, except to the extent of permitted cash distributions from OLP to Boykin. Likewise, the assets of other entities are not available to pay the creditors of OLP. The loan agreement also requires OLP to hold funds in escrow for the payment of capital expenditures, insurance and real estate taxes. The term note also requires OLP to maintain compliance with certain financial covenants. OLP was in compliance with these covenants at June 30, 1999 and December 31, 1998. 6. PERCENTAGE LEASE AGREEMENTS: 9 The percentage leases have noncancelable remaining terms ranging from two to nine years, subject to earlier termination on the occurrence of certain contingencies, as defined. The rent due under each percentage lease is the greater of minimum rent, as defined, or percentage rent. Percentage rent applicable to room and other hotel revenue varies by lease and is calculated by multiplying fixed percentages by the total amounts of such revenues over specified threshold amounts. Both the minimum rent and the revenue thresholds used in computing percentage rents are subject to annual adjustments based on increases in the United States Consumer Price Index ("CPI"). Percentage rent applicable to food and beverage revenues is calculated by multiplying fixed percentages by the total amounts of such revenues. Percentage Lease revenue for the three months ended June 30, 1999 and 1998 was $23,852 and $17,364 respectively, of which approximately $8,622 and $5,456 respectively, was in excess of minimum rent. Percentage lease revenue for the six months ended June 30, 1999 and 1998 was $43,246 and $28,223, respectively, of which approximately $12,802 and $7,758, respectively, was in excess of minimum rent. Boykin Lodging recognizes lease revenue for interim and annual reporting purposes on an accrual basis pursuant to the terms of the respective percentage leases. Future minimum rentals (ignoring future CPI increases) to be received by Boykin from BMC and from other lessees pursuant to the percentage leases for each of the years in the period 1999 to 2003 and in total thereafter are as follows:
Related Party Other Lessees Lessees Totals ------- ------- ------ Remainder of 1999 $ 24,630 $ 4,538 $ 29,168 2000 49,261 9,076 58,337 2001 42,960 9,076 52,036 2002 36,055 7,677 43,732 2003 11,439 5,884 17,323 Thereafter 26,409 23,067 49,476 -------- ------- -------- $190,754 $59,318 $250,072
7. RELATED PARTY TRANSACTIONS: The Chairman, President and Chief Executive Officer of Boykin Lodging is the majority shareholder of BMC. BMC and Westboy LLC, a subsidiary of BMC, were a significant source of Boykin's percentage lease revenue through June 30, 1999. At June 30, 1999 and December 31, 1998, Boykin had rent receivable of $8,958 and $4,748, respectively, due from related party lessees. Boykin Lodging paid Spectrum Design Services, a subsidiary of BMC, $465 for design and other services through June 30, 1999. Of this total, $228 was for design services, $194 represented purchasing services and $43 was reimbursement of expenses incurred while performing services for the hotels during 1999. At June 30, 1999 and December 31, 1998, Boykin had a payable to related party lessees of $802 and $2,971, respectively, primarily for the reimbursement of capital expenditure costs incurred on behalf of the Partnership and OLP. 8. STATEMENT OF CASH FLOWS, SUPPLEMENTAL DISCLOSURES: During the six-month periods ended June 30, 1999 and 1998, noncash financing transactions consisted of $8,665 and $8,671 respectively, of dividends and Partnership distributions which were declared but not paid as of June 30, 1999 and 1998, respectively. 10 Interest paid during the six-month periods ended June 30, 1999 and 1998 was $10,063 and $1,147 respectively. In the first half of 1999, Boykin issued 99,721 common shares, valued at $1,390 under Boykin's Long-Term Incentive Plan. 9. PRO FORMA FINANCIAL INFORMATION: The pro forma financial information set forth below for the six months ended June 30, 1998 is presented as if the following significant transactions had been consummated as of January 1, 1998: - the share offering of 4,500,000 common shares in February 1998; - the issuance of 3,109,606 common shares in May 1998 related to the Red Lion merger; - the acquisitions of properties by Boykin in 1998; and - Boykin's common share repurchase of 114,500 shares in 1998. The pro forma financial information is not necessarily indicative of what the actual results of operations of Boykin would have been assuming these transactions had been consummated as of January 1, 1998, nor does it purport to represent the results of operations for future periods.
Six Months Ended June 30, 1998 ------------- Revenues: Lease revenue $41,411 Interest income 167 -------- 41,578 -------- Expenses: Real estate related depreciation and amortization 13,307 Real estate and personal property taxes, insurance and ground rent 4,954 General and administrative 1,901 Interest expense 9,556 Amortization of deferred financing costs 334 -------- -------- Net income before minority interest and extraordinary item 11,526 Minority interest 1,046 -------- Income before extraordinary item $10,480 -------- -------- Income per share before extraordinary item Basic $.61 Diluted $.61
11 BOYKIN MANAGEMENT COMPANY LIMITED LIABILITY COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1999 AND DECEMBER 31, 1998 (AMOUNTS IN THOUSANDS)
(Unaudited) June 30, December 31, ASSETS 1999 1998 - ------ ------------ ------------ Cash and cash equivalents $ 22,994 $ 12,973 Accounts receivable: Trade, net of allowance for doubtful accounts of $111 and $166 at June 30, 1999 and December 31, 1998, respectively 10,533 8,097 Related party lessors 802 2,971 Other 429 178 Inventories 2,289 2,060 Property and equipment, net 385 434 Investment in Boykin Lodging Company 284 248 Prepaid expenses and other assets 2,289 2,383 ------------ ------------ Total assets $ 40,005 $ 29,344 ------------ ------------ ------------ ------------ LIABILITIES AND MEMBERS' CAPITAL Rent payable to related party lessors $ 8,958 $ 4,748 Accounts payable: Trade 3,584 3,114 Advance deposits 1,209 774 Bank overdraft liability 5,478 4,806 Accrued expenses: Accrued payroll 1,959 633 Accrued vacation 2,785 2,250 Accrued sales, use and occupancy taxes 2,364 1,856 Accrued management fee 2,823 4,044 Other accrued liabilities 5,947 3,080 ------------ ------------ Total liabilities 35,107 25,305 ------------ ------------ Members' capital: Capital contributed 3,000 3,000 Retained earnings 2,069 1,282 Accumulated other comprehensive loss (171) (243) ------------ ------------ Total members' capital 4,898 4,039 ------------ ------------ Total liabilities and members' capital $ 40,005 $ 29,344 ------------ ------------ ------------ ------------
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. 12 BOYKIN MANAGEMENT COMPANY LIMITED LIABILITY COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED, AMOUNTS IN THOUSANDS)
Three Months Ended Six Months Ended June 30, June 30, --------- -------- 1999 1998 1999 1998 ------ ------ ------- ------- Revenues: Room revenue $42,291 $39,968 $77,042 $72,486 Food and beverage revenue 18,883 18,768 36,149 34,696 Other hotel revenue 3,949 4,071 7,277 7,060 Other revenue 571 809 1,096 1,564 ------ ------ ------- ------- Total revenues 65,694 63,616 121,564 115,806 ------ ------ ------- ------- Expenses: Departmental expenses of hotels: Rooms 9,609 9,460 18,342 17,461 Food and beverage 13,360 13,851 26,077 26,012 Other 2,403 2,110 4,252 3,673 Cost of goods sold of non-hotel operations - 145 15 396 Percentage lease expense 19,547 18,563 35,168 33,297 General and administrative 6,419 6,380 12,623 12,317 Advertising and promotion 3,249 2,703 6,289 5,334 Utilities 2,945 2,503 5,995 5,023 Franchisor royalties and other charges 2,065 2,011 3,791 3,694 Repairs and maintenance 1,636 2,376 3,505 4,391 Depreciation and amortization 30 23 60 45 Management fee expense 2,406 2,534 4,175 4,321 Other expense 314 (128) 485 (112) ------ ------ ------- ------- Total expenses 63,983 62,531 120,777 115,852 ------ ------ ------- ------- Net income (loss) $1,711 $1,085 $787 $(46) ------ ------ ------- ------- ------ ------ ------- ------- Comprehensive income (loss) $1,790 $990 $859 $(141) ------ ------ ------- ------- ------ ------ ------- -------
The accompanying notes to consolidated financial statements are an integral part of these statements. 13 BOYKIN MANAGEMENT COMPANY LIMITED LIABILITY COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED, AMOUNTS IN THOUSANDS)
1999 1998 ------- ------ Cash flows from operating activities: Net income (loss) $ 787 $ (46) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 60 45 Realized loss on investment 36 -- Changes in assets and liabilities: Accounts receivable (518) (4,883) Inventories (229) (1,558) Prepaid expenses and other assets 94 (707) Rent payable 4,210 6,485 Accounts payable 1,577 1,841 Other accrued liabilities 4,015 5,275 ------- ------ Net cash provided by operating activities 10,032 6,452 ------- ------ Cash flows from investing activities: Property additions (11) (155) ------- ------ Net cash used for investing activities (11) (155) ------- ------ Cash flows from financing activities --- --- ------- ------ Net increase in cash and cash equivalents 10,021 6,297 Cash and cash equivalents, beginning of period 12,973 6,862 ------- ------ Cash and cash equivalents, end of period $22,994 $13,159 ------- ------ ------- ------
The accompanying notes to consolidated financial statements are an integral part of these statements. 14 BOYKIN MANAGEMENT COMPANY LIMITED LIABILITY COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1999 (DOLLAR AMOUNTS IN THOUSANDS) 1. DESCRIPTION OF BUSINESS: Boykin Management Company Limited Liability Company and its subsidiaries (collectively, "BMC") - lease and operate full and limited service hotels located throughout the United States pursuant to long-term percentage leases; - manage full and limited service hotels located throughout the United States pursuant to management agreements; - provide national purchasing services to hotels; and - provide interior design services to hotels and other businesses. 2. ORGANIZATION: BMC commenced operations on November 4, 1996 as an Ohio limited liability company. BMC is indirectly owned by Robert W. Boykin (53.8%) and John E. Boykin (46.2%). Robert W. Boykin is the Chairman, President and Chief Executive Officer of Boykin Lodging Company. Pursuant to formation transactions related to the November 4, 1996 initial public offering of Boykin Lodging, Boykin Management Company ("former BMC") and Bopa Design Company (doing business as Spectrum Services), wholly owned subsidiaries of The Boykin Company ("TBC"), were merged into subsidiaries of BMC. In addition, Purchasing Concepts, Inc. ("PCI") contributed its assets to a subsidiary of BMC and that subsidiary assumed PCI's liabilities. TBC and PCI are related through common ownership. BMC and its subsidiaries are the successors to the businesses of former BMC, Spectrum Services and PCI. As BMC, former BMC, Spectrum Services and PCI were related through common ownership, there were no purchase accounting adjustments to the historical carrying values of the assets and liabilities of former BMC, Spectrum Services and PCI upon the merger into or contribution to the subsidiaries of BMC. 3. BASIS OF PRESENTATION: The separate financial statements of BMC's subsidiaries have been presented on a consolidated basis with BMC. All significant intercompany transactions and balances have been eliminated. These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. For further information, refer to BMC's consolidated financial statements and the footnotes thereto included in Boykin Lodging's annual report on Form 10-K for the year ended December 31, 1998. 4. PERCENTAGE LEASE AGREEMENTS: BMC LEASES ON 15 HOTELS BMC leases 15 hotels (the "BMC Hotels") from the Partnership pursuant to long-term percentage leases. The BMC Hotels are located in Cleveland, Ohio (2); Columbus, Ohio; Buffalo, New York; Berkeley, California; Raleigh, North Carolina; Charlotte, North Carolina (2); High Point, North Carolina; Knoxville, Tennessee; Ft. Myers, Florida; Melbourne, Florida (2); Daytona Beach, Florida; and French Lick, Indiana. 15 The percentage leases have noncancellable remaining terms ranging from two to nine years, subject to earlier termination on the occurrence of certain contingencies, as defined. BMC is required to pay the higher of minimum rent, as defined, or percentage rent. Percentage rent applicable to room and other hotel revenue varies by lease and is calculated by multiplying fixed percentages by the total amounts of such revenues over specified threshold amounts. Percentage rent related to food and beverage revenues and other revenues, in some cases, is based on fixed percentages of such revenues. Both the threshold amounts used in computing percentage rent and minimum rent on room and other hotel revenues are subject to adjustments as of January 1 of each year based on increases in the United States Consumer Price Index. For both annual and interim reporting purposes, BMC recognizes percentage lease expense on an accrual basis pursuant to the provisions of the related percentage lease agreements. Other than real estate and personal property taxes, casualty insurance, ground lease rental, and capital improvements, which are obligations of the Partnership, the percentage leases require BMC to pay all costs and expenses incurred in the operation of the BMC Hotels. The percentage leases require BMC to indemnify Boykin Lodging Company against all liabilities, costs and expenses incurred by, imposed on or asserted against the Partnership in the normal course of operating the BMC Hotels. WESTBOY LEASE ON TEN DOUBLETREE HOTELS Effective January 1, 1998, Westboy, LLC ("Westboy"), a wholly-owned subsidiary of BMC, entered into a long term lease agreement with Red Lion Inns Operating L.P. ("OLP") with terms similar to those described above. OLP was acquired by Boykin Lodging Company on May 22, 1998. The ten DoubleTree-licensed hotels (the "DoubleTree Hotels") leased by Westboy are located in California, Oregon (3), Washington (3), Colorado, Idaho and Nebraska. The hotels are managed by a subsidiary of Promus Hotel Corporation. BMC made an initial capital contribution to Westboy of $1,000, of which $900 was funded with a demand promissory note. Assets of Westboy are not available to pay the creditors of any other entity, except to the extent of permitted cash distributions from Westboy to BMC. Similarly, except to the extent of the unpaid promissory note, the assets of BMC are not available to pay the creditors of Westboy. Future minimum rentals (ignoring CPI increases) to be paid by BMC and Westboy under their respective percentage lease agreements at June 30, 1999 for each of the years in the period 1999 to 2003 and in total thereafter are as follows: Remainder of 1999 $ 24,630 2000 49,261 2001 42,960 2002 36,055 2003 11,439 Thereafter 26,409 --------- $ 190,754
5. RELATED PARTY TRANSACTIONS: Percentage lease expense payable to the Partnership was $19,547 and $12,481 for the three months ended June 30, 1999 and 1998, respectively. Percentage lease expense payable for the six months ended June 30, 1999 and 1998 was $35,168, and $22,601, respectively. At June 30, 1999 and December 31, 1998, BMC (including Westboy) had receivables from the Partnership (including OLP) of $802 and $2,971, respectively, primarily for the reimbursement of capital expenditure costs incurred on behalf of the Partnership and OLP. At June 30, 1999 and December 31, 1998, BMC (including Westboy) had payables to the Partnership (including OLP) of $8,958 and $4,748, respectively, for amounts due pursuant to the percentage leases. 16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BACKGROUND AND BUSINESS STRATEGIES Boykin Lodging Company, an Ohio corporation, is a real estate investment trust that owns hotels throughout the United States and leases its properties to established hotel operators. Our primary business strategies are: - - acquiring upscale, full-service commercial and resort hotels that will increase our cash flow and are purchased at a discount to their replacement cost; - - developing strategic alliances and relationships with both a network of high-quality hotel operators and franchisors of the hotel industry's premier upscale brands; and - - maximizing revenue growth in our hotels through - - strong management performance from our lessee/operators; - selective renovation; - expansion and development; and - brand repositioning. BOYKIN'S FORMATION AND DEVELOPMENT On November 4, 1996, we completed our IPO, issuing a total of 9.5 million common shares. In conjunction with our IPO, we contributed approximately $133.9 million to Boykin Hotel Properties, L.P., an Ohio limited partnership (the "Partnership"), in exchange for an approximate 84.5% equity interest as the sole general partner of the Partnership and we loaned $40 million to the Partnership in exchange for an intercompany convertible note. The Partnership then acquired nine hotel properties and another eight hotel properties in 1997 using remaining proceeds from the IPO and borrowings under our credit facility. We do all of our business through the Partnership. On February 24, 1998, we completed a follow-on public equity offering, issuing an additional 4.5 million common shares. The net proceeds of approximately $106.3 million were contributed to the Partnership, increasing our ownership percentage therein to 90.3%. The proceeds were used by the Partnership to pay down existing indebtedness under the credit facility, purchase limited partnership units from two unaffiliated limited partners, fund the acquisitions of two hotels purchased in March 1998 and for general corporate purposes. On May 22, 1998 we completed our merger with Red Lion Inns Limited Partnership, in which we acquired Red Lion Inns Operating L.P. ("OLP"), which owns a portfolio of ten DoubleTree-licensed hotels. In the transaction, we issued 3.1 million common shares and paid approximately $35.3 million in cash to the Red Lion limited partners and general partner. The total consideration value, including assumed liabilities of approximately $155.7 million and common shares issued valued at $80.3 million, was $271.3 million. The issuance of our common shares in the merger had the impact of increasing our ownership percentage in the Partnership to 92.2%. We currently own 31 hotels containing a total of 8,689 guest rooms located in 16 different states. Our principal source of revenue is lease payments from lessees pursuant to percentage lease agreements. Percentage lease revenue is based upon the room, food and beverage and other revenues of our hotels. The lessees' ability to make payments to us pursuant to the percentage leases is dependent primarily upon the operations of the hotels. SECOND QUARTER HIGHLIGHTS AND OUTLOOK FOR THE REMAINDER OF 1999 Refer to the "Results of Operations" section below for discussion of our second quarter results compared to 1998 as well as the operational results of BMC. During the first half of 1999, we continued our renovation program, spending $13.4 million, or approximately nine percent of hotel revenues. The majority of these capital expenditures went into four of our 17 DoubleTree hotels, which underwent major guestroom renovations. The Holiday Inn Minneapolis West, Cleveland Marriott East and Radisson Hotel Mt. Laurel renovations are in progress. We plan to spend a total of approximately $25 million in 1999, which is approximately eight percent of our expected hotel revenues. The majority of this amount will be spent renovating six of our DoubleTree hotels, as part of a $20 million renovation program expected to be complete by mid-2000. We believe it is important to keep our hotels in first-class condition in an effort to outperform the competition and to deliver superior REVPAR gains, and we are focusing our renovation activities on hotels in areas with the highest revenue potential. We also believe the long-term demand for rooms in most of our markets will continue to grow and therefore we expect to continue to implement our renovation plans aggressively. In spite of new hotels opening this year in certain of our markets, we anticipate a positive impact on our results of operations stemming from the hotels we renovated and repositioned in 1998 and those we are renovating in 1999. We continue to actively seek acquisitions, but we are being selective in terms of yield and earnings criteria. We continue to actively market the sale of our four non-strategic DoubleTree hotels acquired last May. We also are considering expansions at a few of our hotels as well as the development or sale of land parcels to maximize the value of our portfolio. RESULTS OF OPERATIONS The following discusses our results of operations and those of BMC for the quarter ended June 30, 1999 compared to the same period in 1998. BOYKIN LODGING COMPANY Quarter ended June 30, 1999 compared to 1998 Our percentage lease revenue increased 37.4% to $23.9 million in 1999, from $17.4 million for the same period in 1998. Percentage lease revenue payable by BMC and Westboy represented $19.5 million, or 82.0% of total percentage lease revenue in the 1999 period, compared to $14.0 million, or 80.4% of total percentage lease revenue, in 1998. The increase in percentage lease revenue from BMC and Westboy is primarily attributable to the lease revenue from Westboy, which commenced upon completion of the Red Lion merger. Net income increased to $6.5 million for the three months ended June 30, 1999, from $4.7 million in 1998. As a percent of total revenue, net income increased to 27.3% in 1999 from 27.0% in 1998, primarily resulting from the extraordinary item in 1998 which reduced 1998 net income by $1.1 million, offset by an increase in 1999 operating expenses. The increase in the size of our hotel portfolio caused expenses to increase. New debt associated with our 1998 acquisitions, the Red Lion merger, and significant renovation activity in 1998 and 1999 increased our interest expense in 1999, despite lower average interest rates in 1999 compared to 1998. General and administrative expenses increased $.5 million to $1.6 million, or 6.6% of revenues because of increased payroll costs associated with hiring management personnel to support our strategic growth objectives. Property taxes, insurance and ground rent increased because of higher property tax assessments associated with property purchases and renovations that have occurred over the past 18 months. Six Months Ended June 30, 1999 Compared to 1998 Our percentage lease revenue increased 53.2% to $43.2 million in 1999, from $28.2 million for the same period in 1998. Percentage lease revenue payable by BMC and Westboy represented $35.2 million, or 81.3% of total percentage lease revenue in the 1999 period, compared to $22.6 million, or 80.0% of total percentage lease revenue, in 1998. The increase in percentage lease revenue from BMC and Westboy is primarily attributable to the lease revenue from Westboy, which commenced upon completion of the Red Lion merger. Net income increased to $9.4 million for the six months ended June 30, 1999, compared to $8.4 million in 1998. As a percent of total revenue, net income decreased to 21.7% in 1999 from 29.5% in 1998, primarily resulting from the following items: - - An increase in interest expense to $10.0 million in 1999 or 23.0% of total revenues, from $3.8 million or 18 13.2% of total revenues in 1998. - - An increase in real estate related depreciation and amortization from $8.3 million or 29.3% of total revenues in 1998, to $14.2 million or 32.8% of total revenues in 1999. The increase in the size of our hotel portfolio caused these increases. New debt associated with our 1998 acquisitions and the Red Lion merger increased our interest expense in 1999, despite lower average interest rates in 1999 compared to 1998. General and administrative expenses increased $1.1 million to $3.0 million, or 6.9% of revenues primarily because of the hiring of management personnel. Our funds from operations ("FFO") for the quarter ended June 30, 1999 were $14.0 million compared to $11.3 million in 1998. The White Paper on Funds From Operations approved by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") in March 1995 defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and sales of properties, plus real estate related depreciation and amortization and after comparable adjustments for our portion of these items related to unconsolidated entities and joint ventures. We believe that FFO is helpful to investors as a measure of the performance of an equity REIT because, along with cash flow from operating activities, financing activities and investing activities, it provides investors with another indication of the ability of a company to incur and service debt, to make capital expenditures and to fund other cash needs. We compute FFO in accordance with the NAREIT White Paper, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than us. FFO does not represent cash generated from operating activities determined by GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. FFO may include funds that may not be available for management's discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions, and other commitments and uncertainties. The following is a reconciliation between net income and FFO for the three months ended June 30, 1999 and 1998, respectively, (in thousands):
Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- 1999 1998 1999 1998 -------- ------ --------- ------- Net income $ 6,531 $ 4,720 $ 9,413 $ 8,369 Extraordinary item --- 1,138 --- 1,138 Real estate related depreciation and amortization 7,107 5,096 14,247 8,316 Minority interest 697 671 976 1,095 FFO applicable to joint venture minority interest (316) (292) (515) (363) -------- ------ -------- ------- Funds from operations $ 14,019 $11,333 $ 24,121 $18,555 -------- ------- -------- ------- -------- ------- -------- -------
19 The following table illustrates key operating statistics of our portfolio for the three and six months ended June 30, 1999, regardless of ownership:
Three Months Ended Six Months Ended June 30, June 30, ------------------------- ------------------------ 1999 1998 (a) 1999 1998(a) --------- ---------- ---------- ---------- All hotels (31 hotels) Hotel revenues $ 80,620 $ 76,517 $ 149,081 $ 142,980 REVPAR $ 66.79 $ 62.66 $ 61.70 $ 59.08 Occupancy 72.5% 67.8% 67.0% 64.2% Average daily rate $ 92.07 $ 92.42 $ 92.07 $ 92.05 Initial Hotels (9 hotels) Hotel revenues $ 24,744 $ 22,749 $ 46,024 $ 43,988 REVPAR $ 77.41 $ 71.22 $ 72.45 $ 69.19 Occupancy 77.8% 73.4% 74.0% 72.0% Average daily rate $ 99.46 $ 97.02 $ 97.87 $ 96.03 DoubleTree Portfolio (10 hotels) Hotel revenues $ 29,170 $ 30,087 $ 54,697 $ 55,120 REVPAR $ 65.83 $ 65.56 $ 59.27 $ 59.11 Occupancy 76.1% 73.6% 69.5% 68.1% Average daily rate $ 86.47 $ 89.06 $ 85.22 $ 86.82 Acquired Hotels (12 hotels)(b) Hotel revenues $ 26,706 $ 23,681 $ 48,360 $ 43,871 REVPAR $ 59.75 $ 53.44 $ 55.95 $ 51.44 Occupancy 65.2% 58.0% 59.3% 54.5% Average daily rate $ 91.69 $ 92.13 $ 94.32 $ 94.36
(a) Includes predecessors' results. (b) Represents the operating results of hotels acquired by us since our IPO, other than the DoubleTree portfolio. 20 BMC Quarter ended June 30, 1999 compared to 1998 For the quarter ended June 30, 1999, BMC's hotel revenues increased 3.7%, to $65.1 million, from $62.8 million for the same period in 1998. The increase in 1999 was due to increased revenues of the Florida hotels and hotels under renovation last year offset by lower revenues of the DoubleTree portfolio in 1999 compared to 1998. Percentage lease expense for the quarter ended June 30, 1999 increased 5.3%, to $19.5 million, compared to $18.6 million for the same period in 1998. Departmental and other hotel operating expenses, consisting primarily of rooms expenses, food and beverage costs, franchise fees, utilities, repairs and maintenance, management fees, and other general and administrative expenses of the hotels were $44.4 million in the quarter ended June 30, 1999 compared to $43.8 million for the same period in 1998. As a percent of hotel revenues, the departmental and other hotel operating expenses decreased to 68.2% in 1999 from 69.8% in 1998. The combination of increased revenues and decreased operating expenses, as a percentage of revenues, resulted in higher net income of $1.7 million for the quarter ended June 30, 1999 compared to net income of $1.1 million in 1998. Six months ended June 30, 1999 compared to 1998 For the six months ended June 30, 1999, BMC's hotel revenues increased 5.4%, to $120.5 million, compared to $114.2 million for the same period in 1998. The increase was due to increased revenues in the Florida hotels and in hotels under renovation in 1998. This was offset by a slight decrease in the revenues from DoubleTree hotels, four of which have been under renovation in 1999. The percentage lease expense for the six months ended June 30, 1999 increased 5.6%, to $35.2 million, from $33.3 million for the same period in 1998 due to the increase in hotel revenues. Departmental and other hotel operating expenses, consisting primarily of rooms expenses, food and beverage costs, franchise fees, utilities, repair and maintenance, management fees, and other general and administrative expenses of the hotels were $85.6 million in the six months ended June 30, 1999 compared to $82.2 million for the same period in 1998. As a percent of hotel revenues, the departmental and other hotel operating expenses decreased to 71.0% in 1999 from 71.9% in 1998. This was primarily due to a decrease in departmental expenses as a percentage of hotel revenues from 41.3% to 40.4% due to efficiencies gained in higher volumes. Also, repairs and maintenance expenses decreased 20% to 2.9% of 1999 hotel revenues compared to 3.8% of 1998 hotel revenues, and general and administrative expenses decreased from 10.8% of hotel revenues in 1998 to 10.5% in 1999. BMC recorded net income of $787 for the six months ended June 30, 1999 compared to a net loss of $46 in 1998. The increase in income is primarily due to increased revenue performance of the hotels in 1999 combined with expense reductions. LIQUIDITY AND CAPITAL RESOURCES Our principal source of cash to meet our cash requirements, including distributions to shareholders, is our share of the Partnership's cash flow from the percentage leases. The lessees' obligations under the percentage leases are largely unsecured and the lessees' ability to make rent payments to the Partnership under the percentage leases are substantially dependent on the lessees' ability to generate sufficient cash flow from the operation of the hotels. As of June 30, 1999, we had $2.2 million of unrestricted cash and cash equivalents, $3.0 million of restricted cash for the payment of capital expenditures, real estate tax and insurance and we had outstanding borrowings totaling $163.0 million and $130.0 million against our credit facility and term note payable, respectively. Effective April 1, 1999, we have a $200 million credit facility available, as limited under the terms of the credit agreement, to fund acquisitions of additional hotels, renovations and capital expenditures, and for our working capital needs. For information relating to the terms of our credit facility and our $130 million term note payable, see Notes 4 and 5, respectively, of the notes to consolidated financial statements of Boykin Lodging Company included in this Form 21 10-Q. We may seek to negotiate additional credit facilities or issue debt instruments. Any debt incurred or issued by us may be secured or unsecured, long-term, medium-term or short-term, bear interest at a fixed or variable rate, and be subject to such other terms as the Board of Directors considers prudent. In November 1997, we filed a shelf registration statement with the Securities and Exchange Commission for the issuance of up to $300 million in securities. Securities issued under this registration statement may be preferred shares, depository shares, common shares or any combination thereof, and may be issued at various times, depending on market conditions. Warrants to purchase these securities may also be issued. The terms of issuance of any securities covered by this registration statement would be determined at the time of their offering. The 4.5 million common shares sold in the February 28, 1998 offering were sold under this registration statement. We anticipate that funds generated from operations and our credit facility will enable us to meet our anticipated cash needs for the next year. Our percentage lease revenues and cash flow are dependent in large part upon the hotel revenues recognized by our lessees. There can be no assurance that those revenues will meet expected levels. The availability of borrowings under the credit facility is restrained by borrowing base and loan-to-value limits, as well as other financial performance covenants contained in the agreement. There can be no assurance that funds will be available in anticipated amounts from the credit facility. Additionally, no assurance can be given that we will make distributions in the future at the current rate, or at all. INFLATION Our revenues are from percentage leases, which can change based on changes in the revenues of our hotels. Therefore, we rely entirely on the performance of the hotels and the lessees' ability to increase revenues to keep pace with inflation. Operators of hotels in general, and our lessees, can change room rates quickly, but competitive pressures may limit the lessees' ability to raise rates to keep pace with inflation. Our general and administrative costs as well as real estate and personal property taxes, property and casualty insurance and ground rent are subject to inflation. YEAR 2000 COMPLIANCE Many computer systems were originally designed to recognize calendar years by the last two digits in the date code field. Beginning in the year 2000, these date code fields will need to accept four-digit entries to distinguish twenty-first century dates from twentieth century dates. As a result, computerized systems, which include information and non-information technology systems, and applications used by us, are being reviewed, evaluated and modified or replaced, if necessary, to ensure all such financial, information and operational systems are Year 2000 compliant. STATE OF READINESS We are addressing the Year 2000 compliance issue by focusing on our corporate facility, which includes all of our administrative, non-hotel operating functions, and on our hotel properties. Corporate Facility: For our corporate facility, our year 2000 compliance procedures are substantially complete for identified business critical systems. We believe that these procedures will avoid a major disruption of our business. Any further procedures performed will be performed as needed throughout the remainder of 1999. Hotel Properties: We are communicating with our lessees and other vendors with whom we do significant business to determine their readiness of Year 2000 compliance. For all of our hotels, we have gained an understanding of the process which our lessees have undertaken to address the risk assessment, validation, remediation and contingency plans related to Year 2000 compliance. These processes have included the following: - - completion of an inventory and assessment of all computerized systems, applications and hardware by internal personnel; - - prioritization of items representing critical business applications; and 22 - - estimation of remediation costs. Most of our lessees are using internal personnel, who have been determining the level of resources needed, necessary modifications or upgrades, remediation and contingency plans to become Year 2000 compliant. Our lessees have given us their estimates of costs and resources needed and are currently upgrading and remediating noncompliant systems. The lessees which have not yet completed their year 2000 programs, expect to complete purchasing of new systems by the end of the third quarter with testing and installation of those new systems occurring in the fourth quarter of 1999. There can be no assurance that the efforts related to the hotel properties will be sufficient to make these properties' computerized systems and applications Year 2000 compliant in a timely manner or that the allocated resources will be sufficient. A failure to become Year 2000 compliant could affect the integrity of the hotel property guest check-in, billing and accounting functions. Certain physical hotel property machinery and equipment could also fail, resulting in safety risks and customer dissatisfaction. We cannot predict at this time the most reasonably likely worst case scenario relating to Year 2000 issues. Year 2000 Project Costs We estimate that total unexpended costs for the Year 2000 compliance review, evaluation, assessment and remediation efforts for the corporate facility and the hotels should not exceed $1.0 million, although there can be no assurance that actual costs will not exceed this amount. During the first half of 1999, we spent approximately $.9 million related to computerized systems and equipment, which are Year 2000 compliant. The vast majority of our costs to remediate this issue are capital in nature and therefore do not affect our funds from operations. Contingency Plan We are in the process of developing our contingency plan for the corporate facility and hotel properties to provide for the most reasonably likely worst case scenarios regarding Year 2000 compliance. This contingency plan is expected to be completed in the third quarter of 1999. SEASONALITY Our hotels' operations historically have been seasonal. Twenty-six of our hotels maintain higher occupancy rates during the second and third quarters. The five hotels located in Florida experience their highest occupancy in the first quarter. This seasonality pattern can be expected to cause fluctuations in our quarterly lease revenue under the percentage leases. To the extent that cash flow from operations is insufficient during any quarter because of temporary or seasonal fluctuations in percentage lease revenue, we expect to utilize cash on hand or borrowings to make quarterly distributions. No assurance can be given that we will make distributions in the future at the current rate, or at all. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK INTEREST RATE RISK In 1998 we entered into a $130 million term note payable which bears interest at a fixed rate of 6.9% for ten years, and a new fixed rate to be determined thereafter. The term note requires interest only payments for the first two years, with principal repayments commencing in the third loan year based on a 25-year amortization schedule. The term note expires in June 2023. Assuming a 10% increase in interest rates as of June 30, 1999, the fair market value of the term note payable would be approximately $126.1 million. In 1998, we also entered into a new unsecured credit facility with a group of banks, which, effective April 1, 1999 enables us to borrow up to $200 million, subject to borrowing base and loan-to-value limitations, at a rate of interest that fluctuates at LIBOR plus 1.40% to 2.25%. Due to changes in the U.S. and global economy, interest rates fluctuate regularly, which creates risk that these rates may increase in the future, which would adversely impact our interest expense and cash flows. 23 PART II ITEM 1. LEGAL PROCEEDINGS Our company is subject to various legal proceedings and claims that arise in the ordinary course of business. In the opinion of management, the amount of any ultimate liability with respect to these actions will not materially affect our financial condition or results of operations. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS (a) On May 25, 1999, the Board of Directors of the Company adopted a Shareholder Rights Agreement (the "Rights Agreement"). Pursuant to the Rights Agreement, the Board of Directors declared a dividend distribution of one Preferred Share Purchase Right (a "Right") for each outstanding common share, without par value, of the Company (the "Common Shares") to shareholders of record as of the close of business on June 15, 1999 (the "Record Date"). In addition, one Right will automatically attach to each Common Share issued after the Record Date and prior to the date the Rights become exercisable. Each Right entitles the registered holder thereof to purchase from the Company a unit (a "Preferred Unit") consisting of one one-thousandth of a Class A Series 1999-A Noncumulative Preferred Share, without par value, at a cash exercise price of $40.00 per Preferred Unit, subject to adjustment. Initially, the Rights are not exercisable and are attached to and trade with the Common Shares outstanding as of, and all Common Shares issued after, the Record Date. The Rights will separate from the Common Shares, separate certificates will be distributed to holders of the Common Shares and the Rights will become exercisable under certain circumstances following the acquisition of, or the announcement of the commencement of a tender or exchange offer that if consummated would result in, beneficial ownership of 15% or more of the outstanding Common Shares by any person or group. After the acquisition of 15% or more of the outstanding Common Shares by any person or group, proper provision will be made so that each holder of a Right (other than that person or group, whose Rights will become null and void) thereafter has the right to receive upon exercise that number of Preferred Units having a market value of two times the exercise price of the Right. The acquisition of Common Shares by AEW Partners III, L.P. under its agreements entered into with the Company in February 1999 will not cause the Rights to become exercisable. The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that attempts to acquire the Company in a transaction not approved by the Board of Directors of the Company. The Rights should not interfere with any merger or other business combination approved by the Board of Directors of the Company, since the Rights Agreement may be amended, subject to certain limitations, or the Rights may be redeemed, also subject to certain limitations prior to the Company's entering into a merger or other business combination. A copy of the Rights Agreement was filed with the Securities and Exchange Commission on June 10, 1999 as an Exhibit to a Registration Statement on Form 8-A. This description of the Rights does not purport to be complete and is qualified in its entirety by reference to that Registration Statement on Form 8-A and the Rights Agreement. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Boykin held its annual meeting of the shareholders on May 25, 1999 at the Cleveland Airport Marriott hotel in Cleveland, Ohio. At the meeting, the shareholders approved a proposal to increase the number of common shares reserved for issuance by 700,000, from 1,000,000 shares to 1,700,000 shares under Boykin's Long-Term Incentive Plan. The results of the vote were as follows: Votes for 12,358,871 Votes against 1,981,833 Abstain 510,348 Shares not voted 2,210,586 The individuals listed below were elected to Boykin's Board of Directors, each to hold office until the annual meeting next succeeding his election and until his successor is elected and qualified, or until his earlier resignation. The table below indicates the votes for, votes against, as well as the abstentions and shares not voted for each nominee.
Name Votes For Votes Against Abstention Shares not Voted ---- --------- ------------- ---------- ---------------- Robert W. Boykin 14,430,054 0 421,003 2,210,581 Raymond P. Heitland 14,681,878 0 169,179 2,210,581 Ivan J. Winfield 14,681,889 0 169,168 2,210,581 Lee C. Howley, Jr. 14,684,574 0 166,483 2,210,581 Frank E. Mosier 14,678,488 0 172,569 2,210,581 William H. Schecter 14,687,724 0 163,333 2,210,581 Albert T. Adams 14,684,245 0 166,812 2,210,581
24 ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.1 Amended and Restated Articles of Incorporation, as amended 3.2* Code of Regulations 4.1* Specimen Share Certificate 4.2 Dividend Reinvestment and Optional Share Purchase Plan 4.3** Shareholder Rights Agreement, dated as of May 25, 1999 between Boykin Lodging Company and National City Bank, as rights agent 27 Financial Data Schedule
* Incorporated by reference from Amendment No. 3 to Boykin Lodging's Registration Statement on Form S-11 (Registration No. 333-6341) (the "Form S-11") filed on October 24, 1996. Each of the above exhibits has the same exhibit number in the Form S-11. ** Incorporated by reference as Exhibit 1 from the Registration Statement on Form 8-A filed on June 10, 1999. (b) Reports on Form 8-K None. 25 FORWARD LOOKING STATEMENTS This Form 10-Q contains statements that constitute forward-looking statements. Those statements appear in a number of places in this Form 10-Q and the documents incorporated by reference herein and include statements regarding the intent, belief or current expectations of Boykin Lodging, its directors or its officers with respect to: - - Leasing, management or performance of the hotels, - - Adequacy of reserves for renovation and refurbishment, - - Potential acquisitions and dispositions by Boykin, - - Boykin's financing plans, - - Boykin's policies regarding investments, acquisitions, dispositions, financings, conflicts of interest and other matters, and - - Trends affecting Boykin's or any hotel's financial condition or results of operations You are cautioned that any such forward-looking statement is not a guarantee of future performance and involves risks and uncertainties, and that actual results may differ materially from those in the forward-looking statement as a result of various factors. The information contained in this Form 10-Q and in the documents incorporated by reference herein identifies important factors that could cause such differences. With respect to any such forward-looking statement that includes a statement of its underlying assumptions or bases, we caution that, while we believe such assumptions or bases to be reasonable and have formed them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material depending on the circumstances. When, in any forward-looking statement, we or our management express an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. /s/ Robert W. Boykin ----------------------------- August 16, 1999 Robert W. Boykin Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) /s/ Paul A. O'Neil ----------------------------- August 16, 1999 Paul A. O'Neil Chief Financial Officer and Treasurer (Principal Accounting Officer) 26 EXHIBIT INDEX
Exhibits -------- 3.1 Amended and Restated Articles of Incorporation, as amended 3.2* Code of Regulations 4.1* Specimen Share Certificate 4.2 Dividend Reinvestment and Optional Share Purchase Plan 4.3** Shareholder Rights Agreement, dated as of May 25, 1999 between Boykin Lodging Company and National City Bank, as rights agent 27 Financial Data Schedule
* Incorporated by reference from Amendment No. 3 to Boykin Lodging's Registration Statement on Form S-11 (Registration No. 333-6341) (the "Form S-11") filed on October 24, 1996. Each of the above exhibits has the same exhibit number in the Form S-11. ** Incorporated by reference as Exhibit 1 from the Registration Statement on Form 8-A filed on June 10, 1999. 27 EX-3.1 2 EXHIBIT 3.1 Exhibit 3.1 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF BOYKIN LODGING COMPANY FIRST: The name of the corporation shall be Boykin Lodging Company (the "Corporation"). SECOND: The place in the State of Ohio where the principal office of the Corporation is located is Cleveland, Cuyahoga County. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be formed under Sections 1701.01 to 1701.98, inclusive, of the Ohio Revised Code. FOURTH: The authorized number of shares of the Corporation is 50,000,000, consisting of 40,000,000 Common Shares, without par value (hereinafter called "Common Shares"), 5,000,000 Class A Cumulative Preferred Shares, without par value (hereinafter called "Cumulative Preferred Shares"), and 5,000,000 Class A Noncumulative Preferred Shares, without par value (hereinafter called "Noncumulative Preferred Shares"). DIVISION A: PREFERRED SHARES I. THE CLASS A CUMULATIVE PREFERRED SHARES. The Cumulative Preferred Shares shall have the following express terms: Section 1. SERIES. The Cumulative Preferred Shares may be issued from time to time in one or more series. All Cumulative Preferred Shares shall be of equal rank and shall be identical, except in respect of the matters that may be fixed by the Board of Directors as hereinafter provided, and each share of a series shall be identical with all other shares of such series, except as to the dates from which dividends shall accrue and be cumulative. All Cumulative Preferred Shares shall rank on a parity with the Noncumulative Preferred Shares and shall be identical to all Noncumulative Preferred Shares except (1) in respect of the matters that may be fixed by the Board of Directors as provided in clauses (a) through (i), inclusive, of this Section 1 and (2) only dividends on Cumulative Preferred Shares shall be cumulative as set forth herein. Subject to the provisions of Sections 2 through 5, both inclusive, and of Items III and IV of this Division, which provisions shall apply to all Cumulative Preferred Shares, the Board of Directors hereby is authorized to cause such shares to be issued in one or more series and with respect to each such series to determine and fix prior to the issuance thereof (and thereafter, to the extent provided in clause (b) of this Section) the following: (a) The designation of the series, which may be by distinguishing number, letter or title; (b) The authorized number of shares of the series, which number the Board of Directors may (except when otherwise provided in the creation of the series) increase or decrease from time to time before or after the issuance thereof (but not below the number of shares thereof then outstanding); (c) The dividend rate or rates of the series, including the means by which such rates may be established; 1 (d) The date or dates from which dividends shall accrue and be cumulative and the dates on which and the period or periods for which dividends, if declared, shall be payable, including the means by which such dates and periods may be established; (e) The redemption rights and price or prices, if any, for shares of the series; (f) The terms and amount of the sinking fund, if any, for the purchase or redemption of shares of the series; (g) The amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation; (h) Whether the shares of the series shall be convertible into Common Shares or shares of any other class and, if so, the conversion rate or rates or price or prices, any adjustments thereof and all other terms and conditions upon which such conversion may be made; and (i) Restrictions (in addition to those set forth elsewhere in these Amended and Restated Articles of Incorporation) on the issuance of shares of the same series or of any other class or series. The Board of Directors is authorized to adopt from time to time amendments to the Amended and Restated Articles of Incorporation, as amended, fixing, with respect to each such series, the matters described in clauses (a) through (i), both inclusive, of this Section and is authorized to take such actions with respect thereto as may be required by law in order to effect such amendments. Section 2. DIVIDENDS. (a) The holders of Cumulative Preferred Shares of each series, in preference to the holders of Common Shares and of any other class of shares ranking junior to the Cumulative Preferred Shares, shall be entitled to receive out of any funds legally available therefor, when and as declared by the Board of Directors, dividends in cash at the rate or rates for such series fixed in accordance with the provisions of Section 1 above and no more, payable on the dates fixed for such series. Such dividends shall accrue and be cumulative, in the case of shares of each particular series, from and after the date or dates fixed with respect to such series. Any dividend payment made on the Cumulative Preferred Shares shall first be credited against the earliest accrued but unpaid dividends on such Cumulative Preferred Shares. No dividends shall be paid upon or declared or set apart for any series of the Cumulative Preferred Shares for any dividend period unless at the same time (i) a like proportionate dividend for the dividend periods terminating on the same or any earlier date, ratably in proportion to the respective annual dividend rates fixed therefor, shall have been paid upon or declared or set apart for all Cumulative Preferred Shares of all series then issued and outstanding and entitled to receive such dividend and (ii) the dividends payable for the dividend periods terminating on the same or any earlier date (but only with respect to the then current dividend period), ratably in proportion to the respective dividend rates fixed therefor, shall have been paid upon or declared or set apart for all Noncumulative Preferred Shares then issued and outstanding and entitled to receive such dividends. (b) So long as any Cumulative Preferred Shares shall be outstanding no dividend, except a dividend payable in Common Shares or other shares ranking junior to the Cumulative Preferred Shares, shall be paid or declared or any distribution be made, except as aforesaid, in respect of the Common Shares or any other shares ranking junior to the Cumulative Preferred Shares, nor shall any Common Shares or any other shares ranking junior to the Cumulative Preferred Shares be purchased, retired or otherwise acquired by the Corporation, except out of the proceeds of the sale of Common Shares or other shares of the Corporation ranking junior to the Cumulative Preferred Shares received by the Corporation subsequent to the date of first issuance of Cumulative Preferred Shares of any series, unless: 2 (1) All accrued and unpaid dividends on Cumulative Preferred Shares, including the full dividends for all current dividend periods, shall have been declared and paid or a sum sufficient for payment thereof set apart; (2) All unpaid dividends on Noncumulative Preferred Shares for the then current dividend period shall have been declared and paid or a sum sufficient for payment therefor set apart; and (3) There shall be no arrearages with respect to the redemption of Cumulative Preferred Shares or Noncumulative Preferred Shares of any series from any sinking fund provided for shares of such series in accordance with Section 1 of this Division A.I or Section 1 of Division A.II. (c) The foregoing restrictions on the payment of dividends or other distributions on, or on the purchase, redemption, retirement or other acquisition of, Common Shares or any other shares ranking on a parity with or junior to the Cumulative Preferred Shares shall be inapplicable to (i) any payments in lieu of issuance of fractional shares thereof, whether upon any merger, conversion, stock dividend or otherwise, (ii) the conversion of Cumulative Preferred Shares or Noncumulative Preferred Shares into Common Shares, and (iii) the exercise by the Corporation of its rights pursuant to Division C or any similar provision hereafter contained in these Amended and Restated Articles of Incorporation with respect to any other class or series of shares hereafter created or authorized. (d) If, for any taxable year, the Corporation elects to designate as "capital gain dividends" (as defined in Section 857 of the Internal Revenue Code), any portion (the "Capital Gains Amount") of the dividends paid or made available for the year to holders of all classes of stock (the "Total Dividends"), then the portion of the Capital Gains Amount that shall be allocable to holders of the Cumulative Preferred Shares shall be the amount that the total dividends paid or made available to the holders of the Cumulative Preferred Shares for the year bears to the Total Dividends. Section 3. REDEMPTION. (a) Subject to the express terms of each series of Cumulative Preferred Shares, the Corporation: (1) May, from time to time at the option of the Board of Directors, redeem all or any part of any redeemable series of Cumulative Preferred Shares at the time outstanding at the applicable redemption price for such series fixed in accordance with Section 1 of this Division A.I.; and (2) Shall, from time to time, make such redemptions of each series of Cumulative Preferred Shares as may be required to fulfill the requirements of any sinking fund provided for shares of such series at the applicable sinking fund redemption price fixed in accordance with Section 1 of this Division A.I.; and shall in each case pay all accrued and unpaid dividends to the redemption date. (b) (1) Notice of every such redemption shall be mailed, postage prepaid, to the holders of record of the Cumulative Preferred Shares to be redeemed at their respective addresses then appearing on the books of the Corporation, not less than 30 days nor more than 60 days prior to the date fixed for such redemption, or such other time prior thereto as the Board of Directors shall fix for any series pursuant to Section 1 of this Division prior to the issuance thereof. At any time after notice as provided above has been deposited in the mail, the Corporation may deposit the aggregate redemption price of Cumulative Preferred Shares to be redeemed, together with accrued and unpaid dividends thereon to the redemption date, with any bank or trust company in Cleveland, Ohio, or New York, New York, having capital and surplus of not less than $100,000,000, named in such notice and direct that there be paid to the respective holders of the Cumulative Preferred Shares so to be redeemed amounts equal to the 3 redemption price of the Cumulative Preferred Shares so to be redeemed, together with such accrued and unpaid dividends thereon, on surrender of the share certificate or certificates held by such holders; and upon the deposit of such notice in the mail and the making of such deposit of money with such bank or trust company, such holders shall cease to be shareholders with respect to such shares; and from and after the time such notice shall have been so deposited and such deposit of money shall have been so made, such holders shall have no rights or claim against the Corporation with respect to such shares, except only the right to receive such money from such bank or trust company without interest or to exercise before the redemption date any unexpired privilege of conversion. If less than all of the outstanding Cumulative Preferred Shares are to be redeemed, the Corporation shall select by lot the shares so to be redeemed in such manner as shall be prescribed by the Board of Directors. (2) If the holders of Cumulative Preferred Shares which have been called for redemption shall not within six years after such deposit claim the amount deposited for the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company and the Corporation shall be relieved of all responsibility in respect thereof and to such holders. (c) Any Cumulative Preferred Shares which are (1) redeemed by the Corporation pursuant to this Section, (2) purchased and delivered in satisfaction of any sinking fund requirement provided for shares of such series, (3) converted in accordance with the express terms thereof, or (4) otherwise acquired by the Corporation, shall resume the status of authorized but unissued Cumulative Preferred Shares without serial designation. (d) Except in connection with the exercise of the Corporation's rights pursuant to Division C or any similar provisions hereafter contained in these Amended and Restated Articles of Incorporation, the Corporation may not purchase or redeem (for sinking fund purposes or otherwise) less than all of the Cumulative Preferred Shares then outstanding except in accordance with a purchase offer made to all holders of record of Cumulative Preferred Shares, unless all dividends on all Cumulative Preferred Shares then outstanding for all previous and current dividend periods shall have been declared and paid or funds therefor set apart and all accrued sinking fund obligations applicable thereto shall have been complied with. Section 4. LIQUIDATION. (a) (1) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of Cumulative Preferred Shares of any series shall be entitled to receive in full out of the assets of the Corporation, including its capital, before any amount shall be paid or distributed among the holders of the Common Shares or any other shares ranking junior to the Cumulative Preferred Shares, the amounts fixed with respect to shares of such series in accordance with Section 1 of this Division A.I., plus an amount equal to all dividends accrued and unpaid thereon to the date of payment of the amount due pursuant to such liquidation, dissolution or winding up of the affairs of the Corporation. If the net assets of the Corporation legally available therefor are insufficient to permit the payment upon all outstanding Cumulative Preferred Shares and Noncumulative Preferred Shares of the full preferential amount to which they are respectively entitled, then such net assets shall be distributed ratably upon all outstanding Cumulative Preferred Shares and Noncumulative Preferred Shares in proportion to the full preferential amount to which each such share is entitled. (2) After payment to the holders of Cumulative Preferred Shares of the full preferential amounts as aforesaid, the holders of Cumulative Preferred Shares, as such, shall have no right or claim to any of the remaining assets of the Corporation. (b) The merger or consolidation of the Corporation into or with any other Corporation, the merger of any other Corporation into it, or the sale, lease or conveyance of all or substantially all the 4 assets of the Corporation, shall not be deemed to be a dissolution, liquidation or winding up for purposes of this Section. Section 5. VOTING. (a) The holders of Cumulative Preferred Shares shall have no voting rights, except as provided in this Section or required by law. (b) (1) If, and so often as, the Corporation shall be in default in the payment of dividends on any series of Cumulative Preferred Shares at the time outstanding, whether or not earned or declared, for a number of dividend payment periods (whether or not consecutive) which in the aggregate contain at least 540 days, the holders of all series of Cumulative Preferred Shares, voting separately as a class, shall be entitled to elect, as herein provided, two members of the Board of Directors of the Corporation; but the holders of the Cumulative Preferred Shares shall not exercise such special class voting rights except at meetings of such shareholders for the election of directors at which the holders of not less than 50% of the Cumulative Preferred Shares are present in person or by proxy; and the special class voting rights provided for in this paragraph when the same shall have become vested shall remain so vested until all accrued and unpaid dividends on the Cumulative Preferred Shares then outstanding shall have been paid or declared and a sum sufficient for the payment thereof set aside for payment, whereupon the holders of the Cumulative Preferred Shares shall be divested of their special class voting rights in respect of subsequent elections of directors, subject to the revesting of such special class voting rights in the event above specified in this paragraph. (2) On a dividend payment default entitling holders of Cumulative Preferred Shares to elect two directors as specified in paragraph (1) of this Subsection, a special meeting of such holders for the purpose of electing such directors shall be called by the Secretary of the Corporation upon written request of, or may be called by, the holders of record of at least 10% of the Cumulative Preferred Shares with respect to which such default exists and notice thereof shall be given in the same manner as that required for the annual meeting of shareholders; but the Corporation shall not be required to call such special meeting if the annual meeting of shareholders shall be called to be held within 90 days after the date of receipt of the foregoing written request from the holders of Cumulative Preferred Shares. At any meeting at which the holders of Cumulative Preferred Shares shall be entitled to elect directors, holders of 50% of the Cumulative Preferred Shares, present in person or by proxy, shall be sufficient to constitute a quorum, and the vote of the holders of a majority of such shares so present at any such meeting at which there shall be such a quorum shall be sufficient to elect the members of the Board of Directors which the holders of Cumulative Preferred Shares are entitled to elect as herein provided. Notwithstanding any provision of these Articles of Incorporation or the Code of Regulations of the Corporation or any action taken by the holders of any class of shares fixing the number of directors of the Corporation, the two directors who may be elected by the holders of Cumulative Preferred Shares pursuant to this Subsection shall serve in addition to any other directors then in office or proposed to be elected otherwise than pursuant to this Subsection. Nothing in this Subsection shall prevent any change otherwise permitted in the total number of or classifications of directors of the Corporation nor require the resignation of any director elected otherwise than pursuant to this Subsection. Notwithstanding any classification of the other directors of the Corporation, the two directors elected by the holders of Cumulative Preferred Shares shall be elected annually for terms expiring at the next succeeding annual meeting of shareholders. (3) Upon any divesting of the special class voting rights of the holders of the Cumulative Preferred Shares in respect of elections of directors as provided in this Subsection, the terms of office of all directors then in office elected by such holders shall terminate immediately thereupon. If the office of any director elected by such holders voting as a class becomes vacant by reason of death, resignation, removal from office or otherwise, the remaining director elected by such holders voting as a class may elect a successor who shall hold office for the unexpired term in respect of which such vacancy occurred. 5 (c) The affirmative vote of the holders of at least two-thirds of the Cumulative Preferred Shares at the time outstanding, voting separately as a class, given in person or by proxy either in writing or at a meeting called for the purpose, shall be necessary to effect either of the following: (1) Any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Amended and Restated Articles of Incorporation or of the Code of Regulations of the Corporation which affects adversely and materially the preferences or voting or other rights of the holders of Cumulative Preferred Shares which are set forth in these Amended and Restated Articles of Incorporation; but neither an amendment of these Amended and Restated Articles of Incorporation so as to authorize, create or change the authorized or outstanding number of Cumulative Preferred Shares or of any shares ranking on a parity with or junior to the Cumulative Preferred Shares nor an amendment of the Code of Regulations so as to change the number or classification of directors of the Corporation shall be deemed to affect adversely and materially preferences or voting or other rights of the holders of Cumulative Preferred Shares; or (2) The authorization, creation or increase in the authorized number of any shares, or of any security convertible into shares, in either case ranking prior to such Cumulative Preferred Shares. (d) If, and only to the extent, that (1) Cumulative Preferred Shares are issued in more than one series and (2) Ohio law permits the holders of a series of a class of shares to vote separately as a class, the affirmative vote of the holders of at least two-thirds of each series of Cumulative Preferred Shares at the time outstanding, voting separately as a class, given in person or by proxy either in writing or at a meeting called for the purpose of voting on such matters, shall be required for any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of these Amended and Restated Articles of Incorporation or of the Code of Regulations of the Corporation which affects adversely and materially the preferences or voting or other rights of the holders of such series which are set forth in these Amended and Restated Articles of Incorporation; but neither an amendment of these Amended and Restated Articles of Incorporation, so as to authorize, create or change the authorized or outstanding number of Cumulative Preferred Shares or of any shares ranking on a parity with or junior to the Cumulative Preferred Shares nor an amendment of the Code of Regulations so as to change the number or classification of directors of the Corporation, shall be deemed to affect adversely and materially the preferences or voting or other rights of the holders of such series. II. THE CLASS A NONCUMULATIVE PREFERRED SHARES. The Noncumulative Preferred Shares shall have the following express terms: Section 1. SERIES. The Noncumulative Preferred Shares may be issued from time to time in one or more series. All Noncumulative Preferred Shares shall be of equal rank and shall be identical, except in respect of the matters that may be fixed by the Board of Directors as hereinafter provided, and each share of a series shall be identical with all other shares of such series, except as to the dates on which and the periods for which dividends may be payable. All Noncumulative Preferred Shares shall rank on a parity with the Cumulative Preferred Shares and shall be identical to all Cumulative Preferred Shares except (1) in respect of the matters that may be fixed by the Board of Directors as provided in clauses (a) through (i), inclusive, of this Section 1 and (2) only dividends on the Cumulative Preferred Shares are cumulative as set forth in Division A.I. herein. Subject to the provisions of Sections 2 through 5, both inclusive, and of Items III and IV of this Division, which provisions shall apply to all Noncumulative Preferred Shares, the Board of Directors hereby is authorized to cause such shares to be issued in one or more series and with respect to each such series to determine and fix prior to the issuance thereof (and thereafter, to the extent provided in clause (b) of this Section) the following: (a) The designation of the series, which may be by distinguishing number, letter or title; 6 (b) The authorized number of shares of the series, which number the Board of Directors may (except when otherwise provided in the creation of the series) increase or decrease from time to time before or after the issuance thereof (but not below the number of shares thereof then outstanding); (c) The dividend rate or rates of the series, including the means by which such rates may be established; (d) The dates on which and the period or periods for which dividends, if declared, shall be payable, including the means by which such dates and periods may be established; (e) The redemption rights and price or prices, if any, for shares of the series; (f) The terms and amount of the sinking fund, if any, for the purchase or redemption of shares of the series; (g) The amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation; (h) Whether the shares of the series shall be convertible into Common Shares or shares of any other class and, if so, the conversion rate or rates or price or prices, any adjustments thereof and all other terms and conditions upon which such conversion may be made; and (i) Restrictions (in addition to those set forth elsewhere in these Amended and Restated Articles of Incorporation) on the issuance of shares of the same series or of any other class or series. The Board of Directors is authorized to adopt from time to time amendments to the Amended and Restated Articles of Incorporation, as amended, fixing, with respect to each such series, the matters described in clauses (a) through (i), both inclusive, of this Section and is authorized to take such actions with respect thereto as may be required by law in order to effect such amendments. Section 2. DIVIDENDS. (a) The holders of Noncumulative Preferred Shares of each series, in preference to the holders of Common Shares and of any other class of shares ranking junior to the Noncumulative Preferred Shares, shall be entitled to receive out of any funds legally available therefor, if, when and as declared by the Board of Directors, dividends in cash at the rate or rates for such series fixed in accordance with the provisions of Section 1 above and no more, payable on the dates fixed for such series. Such dividends shall accrue, in the case of shares of each particular series, from and after the date or dates fixed with respect to such series; provided, however, that if the Board of Directors fails to declare a dividend payable on a dividend payment date on any Noncumulative Preferred Shares, the holders of the Noncumulative Preferred Shares shall have no right to receive a dividend in respect of the dividend period ending on such dividend payment date, and the Corporation shall have no obligation to pay the dividend accrued for such period, whether or not dividends on such Noncumulative Preferred Shares are declared payable on any future dividend payment date. Any dividend payment made on the Noncumulative Preferred Shares shall first be credited against the earliest declared but unpaid dividend on such Noncumulative Preferred Shares. No dividends shall be paid upon or declared or set apart for any series of the Noncumulative Preferred Shares for any dividend period unless at the same time (i) a like proportionate dividend for the then current dividend period, ratably in proportion to the respective annual dividend rates fixed therefor, shall have been paid upon or declared or set apart for all Noncumulative Preferred Shares of all series then issued and outstanding and entitled to receive such dividend and (ii) the dividends payable for the dividend periods terminating on the same or any earlier date, ratably in proportion to the respective dividend rates fixed therefor, shall have been paid upon or declared and set apart for all Cumulative Preferred Shares then issued and outstanding and entitled to receive such dividends. 7 (b) So long as any Noncumulative Preferred Shares shall be outstanding no dividend, except a dividend payable in Common Shares or other shares ranking junior to the Noncumulative Preferred Shares, shall be paid or declared or any distribution be made, except as aforesaid, in respect of the Common Shares or any other shares ranking junior to the Noncumulative Preferred Shares, nor shall any Common Shares or any other shares ranking junior to the Noncumulative Preferred Shares be purchased, retired or otherwise acquired by the Corporation, except out of the proceeds of the sale of Common Shares or other shares of the Corporation ranking junior to the Noncumulative Preferred Shares received by the Corporation subsequent to the date of first issuance of Noncumulative Preferred Shares of any series, unless: (1) All accrued and unpaid dividends on Cumulative Preferred Shares, including the full dividends for all current dividend periods, shall have been declared and paid or a sum sufficient for payment thereof set apart; (2) All unpaid dividends on Noncumulative Preferred Shares for the then current dividend period shall have been declared and paid or a sum sufficient for payment therefor set apart; and (3) There shall be no arrearages with respect to the redemption of Cumulative Preferred Shares or Noncumulative Preferred Shares of any series from any sinking fund provided for shares of such series in accordance with the provisions of Section 1 of this Division A.II or Section 1 of Division A.I. (c) The foregoing restrictions on the payment of dividends or other distributions on, or on the purchase, redemption, retirement or other acquisition of, Common Shares or any other shares ranking on a parity with or junior to the Noncumulative Preferred Shares shall be inapplicable to (i) any payments in lieu of issuance of fractional shares thereof, whether upon any merger, conversion, stock dividend or otherwise, (ii) the conversion of Cumulative Preferred Shares or Noncumulative Preferred Shares into Common Shares, and (iii) the exercise by the Corporation of its rights pursuant to Division C or any similar provisions hereafter contained in these Amended and Restated Articles of Incorporation with respect to any other class or series of shares hereafter created or authorized. (d) If, for any taxable year, the Corporation elects to designate as "capital gain dividends" (as defined in Section 857 of the Internal Revenue Code), any portion (the "Capital Gains Amount") of the dividends paid or made available for the year to holders of all classes of stock (the "Total Dividends"), then the portion of the Capital Gains Amount that shall be allocable to holders of the Noncumulative Preferred Shares shall be the amount that the total dividends paid or made available to the holders of the Noncumulative Preferred Shares for the year bears to the Total Dividends. Section 3. REDEMPTION. (a) Subject to the express terms of each series, the Corporation: (1) May, from time to time at the option of the Board of Directors, redeem all or any part of any redeemable series of Noncumulative Preferred Shares at the time outstanding at the applicable redemption price for such series fixed in accordance with Section 1 of this Division A.II.; and (2) Shall, from time to time, make such redemptions of each series of Noncumulative Preferred Shares as may be required to fulfill the requirements of any sinking fund provided for shares of such series at the applicable sinking fund redemption price fixed in accordance with Section 1 of this Division A.II.; and shall in each case pay all unpaid dividends for the then current dividend period to the redemption date. 8 (b) (1) Notice of every such redemption shall be mailed, postage prepaid, to the holders of record of the Noncumulative Preferred Shares to be redeemed at their respective addresses then appearing on the books of the Corporation, not less than 30 days nor more than 60 days prior to the date fixed for such redemption, or such other time prior thereto as the Board of Directors shall fix for any series pursuant to Section 1 of this Division prior to the issuance thereof. At any time after notice as provided above has been deposited in the mail, the Corporation may deposit the aggregate redemption price of Noncumulative Preferred Shares to be redeemed, together with unpaid dividends thereon for the then current dividend period to the redemption date, with any bank or trust company in Cleveland, Ohio, or New York, New York, having capital and surplus of not less than $100,000,000, named in such notice and direct that there be paid to the respective holders of the Noncumulative Preferred Shares so to be redeemed amounts equal to the redemption price of the Noncumulative Preferred Shares so to be redeemed together with such accrued and unpaid dividends thereon for the then current dividend period, on surrender of the share certificate or certificates held by such holders; and upon the deposit of such notice in the mail and the making of such deposit of money with such bank or trust company, such holders shall cease to be shareholders with respect to such shares; and from and after the time such notice shall have been so deposited and such deposit of money shall have been so made, such holders shall have no rights or claim against the Corporation with respect to such shares, except only the right to receive such money from such bank or trust company without interest or to exercise before the redemption date any unexpired privilege of conversion. If less than all of the outstanding Noncumulative Preferred Shares are to be redeemed, the Corporation shall select by lot the shares so to be redeemed in such manner as shall be prescribed by the Board of Directors. (2) If the holders of Noncumulative Preferred Shares which have been called for redemption shall not within six years after such deposit claim the amount deposited for the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company and the Corporation shall be relieved of all responsibility in respect thereof and to such holders. (c) Any Noncumulative Preferred Shares which are (1) redeemed by the Corporation pursuant to this Section, (2) purchased and delivered in satisfaction of any sinking fund requirement provided for shares of such series, (3) converted in accordance with the express terms thereof, or (4) otherwise acquired by the Corporation, shall resume the status of authorized but unissued Noncumulative Preferred Shares without serial designation. (d) Except in connection with the exercise of the Corporation's rights pursuant to Division C or any similar provisions hereafter contained in these Amended and Restated Articles of Incorporation, the Corporation may not purchase or redeem (for sinking fund purposes or otherwise) less than all of the Noncumulative Preferred Shares then outstanding except in accordance with a purchase offer made to all holders of record of Noncumulative Preferred Shares, unless all unpaid dividends on all Noncumulative Preferred Shares then outstanding shall have been paid or funds therefor set apart and all accrued sinking fund obligations applicable thereto shall have been complied with. Section 4. LIQUIDATION. (a) (1) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of Noncumulative Preferred Shares of any series shall be entitled to receive in full out of the assets of the Corporation, including its capital, before any amount shall be paid or distributed among the holders of the Common Shares or any other shares ranking junior to the Noncumulative Preferred Shares, the amounts fixed with respect to shares of such series in accordance with Section 1 of this Division A.II., plus an amount equal to all dividends declared and unpaid thereon. If the net assets of the Corporation legally available therefor are insufficient to permit the payment upon all outstanding Cumulative Preferred Shares and Noncumulative Preferred Shares of the full preferential amount to which they are respectively entitled, then such net assets shall be distributed 9 ratably upon all outstanding Cumulative Preferred Shares and Noncumulative Preferred Shares in proportion to the full preferential amount to which each such share is entitled. (2) After payment to the holders of Noncumulative Preferred Shares of the full preferential amounts as aforesaid, the holders of Noncumulative Preferred Shares, as such, shall have no right or claim to any of the remaining assets of the Corporation. (b) The merger or consolidation of the Corporation into or with any other Corporation, the merger of any other Corporation into it, or the sale, lease or conveyance of all or substantially all the assets of the Corporation, shall not be deemed to be a dissolution, liquidation or winding up for purposes of this Section. Section 5. VOTING. (a) The holders of Noncumulative Preferred Shares shall have no voting rights, except as provided in this Section or required by law. (b) (1) If, and so often as, the Corporation shall not have fully paid, or shall not have declared and set aside a sum sufficient for the payment of, dividends on any series of Noncumulative Preferred Shares at the time outstanding, for a number of dividend payment periods (whether or not consecutive) which in the aggregate contain at least 540 days, the holders of all series of such Noncumulative Preferred Shares, voting separately as a class, shall be entitled to elect, as herein provided, two members of the Board of Directors of the Corporation; but the holders of the Noncumulative Preferred Shares shall not exercise such special class voting rights except at meetings of such shareholders for the election of directors at which the holders of not less than 50% of the Noncumulative Preferred Shares are present in person or by proxy; and the special class voting rights provided for in this paragraph when the same shall have become vested shall remain so vested until the Corporation shall have fully paid, or shall have set aside a sum sufficient for the payment of, dividends on such Noncumulative Preferred Shares then outstanding for a number of consecutive dividend payment periods which in the aggregate contain at least 360 days, whereupon the holders of the Noncumulative Preferred Shares shall be divested of their special class voting rights in respect of subsequent elections of directors, subject to the revesting of such special class voting rights in the event above specified in this paragraph. (2) On an event entitling holders of Noncumulative Preferred Shares to elect two directors as specified in paragraph (1) of this Subsection, a special meeting of such holders for the purpose of electing such directors shall be called by the Secretary of the Corporation upon written request of, or may be called by, the holders of record of at least 10% of the Noncumulative Preferred Shares of the affected series and notice thereof shall be given in the same manner as that required for the annual meeting of shareholders; but the Corporation shall not be required to call such special meeting if the annual meeting of shareholders shall be called to be held within 90 days after the date of receipt of the foregoing written request from the holders of Noncumulative Preferred Shares. At any meeting at which the holders of Noncumulative Preferred Shares shall be entitled to elect directors, holders of 50% of the Noncumulative Preferred Shares, present in person or by proxy, shall be sufficient to constitute a quorum, and the vote of the holders of a majority of such shares so present at any such meeting at which there shall be such a quorum shall be sufficient to elect the members of the Board of Directors which the holders of Noncumulative Preferred Shares are entitled to elect as herein provided. Notwithstanding any provision of these Amended and Restated Articles of Incorporation or the Code of Regulations of the Corporation or any action taken by the holders of any class of shares fixing the number of directors of the Corporation, the two directors who may be elected by the holders of Noncumulative Preferred Shares pursuant to this Subsection shall serve in addition to any other directors then in office or proposed to be elected otherwise than pursuant to this Subsection. Nothing in this Subsection shall prevent any change otherwise permitted in the total number of or classifications of directors of the Corporation nor require the resignation of any director elected otherwise than pursuant to this Subsection. Notwithstanding any 10 classification of the other directors of the Corporation, the two directors elected by the holders of Noncumulative Preferred Shares shall be elected annually for terms expiring at the next succeeding annual meeting of shareholders. (3) Upon any divesting of the special class voting rights of the holders of the Noncumulative Preferred Shares in respect of elections of directors as provided in this Subsection, the terms of office of all directors then in office elected by such holders shall terminate immediately thereupon. If the office of any director elected by such holders voting as a class becomes vacant by reason of death, resignation, removal from office or otherwise, the remaining director elected by such holders voting as a class may elect a successor who shall hold office for the unexpired term in respect of which such vacancy occurred. (c) The affirmative vote of the holders of at least two-thirds of the Noncumulative Preferred Shares at the time outstanding, voting separately as a class, given in person or by proxy either in writing or at a meeting called for the purpose, shall be necessary to effect either of the following: (1) Any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Amended and Restated Articles of Incorporation or of the Code of Regulations of the Corporation which affects adversely and materially the preferences or voting or other rights of the holders of Noncumulative Preferred Shares which are set forth in these Amended and Restated Articles of Incorporation; but neither an amendment of these Amended and Restated Articles of Incorporation so as to authorize, create or change the authorized or outstanding number of Noncumulative Preferred Shares or of any shares ranking on a parity with or junior to the Noncumulative Preferred Shares nor an amendment of the Code of Regulations so as to change the number or classification of directors of the Corporation shall be deemed to affect adversely and materially preferences or voting or other rights of the holders of Noncumulative Preferred Shares; or (2) The authorization, creation or increase in the authorized number of any shares, or any security convertible into shares, in either case ranking prior to such Noncumulative Preferred Shares. (d) If, and only to the extent, that (1) Noncumulative Preferred Shares are issued in more than one series and (2) Ohio law permits the holders of a series of a class of shares to vote separately as a class, the affirmative vote of the holders of at least two-thirds of each series of the Noncumulative Preferred Shares at the time outstanding, voting separately as a class, given in person or by proxy either in writing or at a meeting called for the purpose of voting on such matters, shall be required for any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of these Amended and Restated Articles of Incorporation or of the Code of Regulations of the Corporation which affects adversely and materially the preferences or voting or other rights of the holders of such series which are set forth in these Amended and Restated Articles of Incorporation; but neither an amendment of these Amended and Restated Articles of Incorporation, so as to authorize, create or change the authorized or outstanding number of Noncumulative Preferred Shares or of any shares remaining on a parity with or junior to the Noncumulative Preferred Shares nor an amendment of the Code of Regulations so as to change the number or classification of directors of the Corporation shall be deemed to affect adversely and materially preferences or voting or other rights of the holders of such series. III. DEFINITIONS. For the purposes of this Division: (a) Whenever reference is made to shares "ranking prior to" Cumulative Preferred Shares or Noncumulative Preferred Shares, such reference shall mean all shares of the Corporation in respect of which the rights of the holders thereof as to the payment of dividends or as to distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the 11 Corporation are given preference over the rights of the holders of Cumulative Preferred Shares or Noncumulative Preferred Shares, as the case may be; (b) Whenever reference is made to shares "on a parity with" Cumulative Preferred Shares or Noncumulative Preferred Shares, such reference shall mean all shares of the Corporation in respect of which the rights of the holders thereof as to the payment of dividends or as to distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation rank equally (except as to the amounts fixed therefor) with the rights of the holders of Cumulative Preferred Shares or Noncumulative Preferred Shares, as the case may be; and (c) Whenever reference is made to shares "ranking junior to" Cumulative Preferred Shares or Noncumulative Preferred Shares, such reference shall mean all shares of the Corporation other than those defined under Subsections (a) and (b) of this Section as shares "ranking prior to" or "on a parity with" Cumulative Preferred Shares or Noncumulative Preferred Shares, as the case may be. IV. RESTRICTIONS ON TRANSFER TO PRESERVE TAX BENEFIT. The Cumulative Preferred Shares and the Noncumulative Preferred Shares are subject to the restrictions on transfer set forth with respect to those shares in Division C of this Article FOURTH. DIVISION B: COMMON SHARES The Common Shares are subject to the express terms of the Cumulative Preferred Shares and any series thereof and to the express terms of the Noncumulative Preferred Shares and any series thereof, and have the following express terms: Section 1. DIVIDEND RIGHTS. The holders of Common Shares shall be entitled to receive, when, as and if declared by the Board of Directors of the Corporation, out of the assets of the Corporation which are by law available therefor, dividends or distributions payable in cash, in property or in securities of the Corporation. Section 2. RIGHTS UPON LIQUIDATION. In the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation, each holder of Common Shares shall be entitled to receive, ratably with each other holder of Common Shares, that portion of the assets of the Corporation available for distribution to its holders of Common Shares as the number of Common Shares held by such holder bears to the total number of Common Shares then outstanding. Section 3. VOTING RIGHTS. The holders of Common Shares shall be entitled to vote on all matters presented to the shareholders of the Corporation (except any matter expressly reserved in these Amended and Restated Articles of Incorporation to holders of shares other than Common Shares), and shall be entitled to one vote for each Common Share entitled to vote thereon. Section 4. RESTRICTIONS ON TRANSFER TO PRESERVE TAX BENEFIT. The Common Shares are subject to the restrictions on transfer set forth with respect to those shares in Division C of this Article FOURTH. DIVISION C: RESTRICTIONS ON TRANSFER OF PREFERRED SHARES AND COMMON SHARES I. RESTRICTIONS ON TRANSFER. Section 1. DEFINITIONS. For purposes of this Division C of this Article FOURTH, the following terms shall have the following meanings set forth below: 12 "Beneficial Ownership" shall mean ownership of Equity Shares by a Person who would be treated as an owner of such Equity Shares either directly or indirectly through the application of Section 544 of the Internal Revenue Code, as modified by Section 856(h)(1)(B) of the Internal Revenue Code. The terms "Beneficial Owner," "Beneficially Owns," and "Beneficially Owned" shall have correlative meanings. "Beneficiary" shall mean, with respect to any Trust, one or more organizations described in each of Section 170(b)(1)(A) (other than clause (vii) or (viii) thereof) and Section 170(c)(2) of the Internal Revenue Code that are named by the Corporation as the beneficiary or beneficiaries of such Trust, in accordance with Section (1) of Division C.II. hereof. "Board of Directors" shall mean the Board of Directors of the Corporation. "Boykin Hotel Properties, L.P. Agreement" shall mean the Amended and Restated Agreement of Limited Partnership of Boykin Hotel Properties, L.P., an Ohio limited partnership. "Constructive Ownership" shall mean ownership of Equity Shares by a Person who would be treated as an owner of such Equity Shares either directly or indirectly through the application of Section 318 of the Internal Revenue Code, as modified by Section 856(d)(5) of the Internal Revenue Code. The terms "Constructive Owner," "Constructively Owns," and "Constructively Owned" shall have correlative meanings. "Equity Shares" shall mean Cumulative Preferred Shares, Noncumulative Preferred Shares and Common Shares of the Corporation. The term "Equity Shares" shall include all Cumulative Preferred Shares, Noncumulative Preferred Shares and Common Shares of the Corporation that are held as Shares-in-Trust in accordance with this Division C of this Article FOURTH. "Initial Public Offering" means the sale of Common Shares pursuant to the Corporation's first effective registration statement for Common Shares filed under the Securities Act of 1933, as amended. "Market Price" on any date shall mean the average of the Closing Price for the five consecutive Trading Days ending on such date. The "Closing Price" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the applicable Equity Shares are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which those Equity Shares are listed or admitted to trading or, if those Equity Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the shares of Equity Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in those Equity Shares selected by the Board of Directors. "Non-Transfer Event" shall mean an event other than a orted Transfer that would cause any Person to Beneficially Own or Constructively Own Equity Shares in excess of the Ownership Limit, including, but not limited to, the issuance, granting of any option or entering into of any agreement for the sale, transfer or other disposition of Equity Shares or the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Equity Shares. 13 "Ownership Limit" shall mean 9% of the number of outstanding shares of any class of Equity Shares. "Permitted Transferee" shall mean any Person designated as a Permitted Transferee in accordance with this Division C. "Person" shall mean an individual, corporation, partnership, estate, trust, a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Internal Revenue Code, association, private foundation within the meaning of Section 509(a) of the Internal Revenue Code, joint stock company or other entity and also includes a "group" as that term is used for purposes of Section 12(d)(3) of the Securities Exchange Act of 1934, as amended. "Prohibited Owner" shall mean, with respect to any purported Transfer or Non-Transfer Event, any Person who, but for this Division C of this Article FOURTH, would own record title to Equity Shares. "Redemption Rights" shall mean the rights granted under the Boykin Hotel Properties, L.P. Agreement to the limited partners to exchange, under certain circumstances, their limited partnership interests for cash (or, at the option of the Corporation, for Common Shares). "Restriction Termination Date" shall mean the first day after the date of the Initial Public Offering on which the Board of Directors determines that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT. "Shares-in-Trust" shall mean any Equity Shares designated as Shares-in-Trust pursuant to this Division C. "Trading Day" shall mean a day on which the principal national securities exchange on which the applicable Equity Shares are listed or admitted to trading is open for the transaction of business or, if those Equity Shares are not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" (as a noun) shall mean any sale, transfer, gift, assignment, devise or other disposition of Equity Shares, whether voluntary or involuntary, whether of record, constructively or beneficially and whether by operation of law or otherwise. "Transfer" (as a verb) shall have the correlative meaning. "Trust" shall mean any separate trust created pursuant to this Division C for the exclusive benefit of any Beneficiary. "Trustee" shall mean any Person or entity unaffiliated with both the Corporation and any Prohibited Owner, such Trustee to be designated by the Corporation to act as trustee of any Trust, or any successor trustee thereof. Section 2. RESTRICTION ON TRANSFERS AND NON-TRANSFER EVENT. (a) Except as set forth in Section 7 below and subject to Section 8 below, from the date of the Initial Public Offering to the Restriction Termination Date, (i) no Person shall Beneficially Own or Constructively Own outstanding Equity Shares in excess of the Ownership Limit, but any Transfer or Non-Transfer Event that, if effective, would result in any Person Beneficially Owning or Constructively Owning outstanding Equity Shares in excess of the Ownership Limit shall be void AB INITIO as to the Transfer or Non-Transfer Event affecting that number of Equity Shares which would be otherwise 14 Beneficially Owned or Constructively Owned by such Person in excess of the Ownership Limit and the intended transferee shall acquire no rights in such excess Equity Shares. (b) Except as set forth in Section 7 below, from the date of the Initial Public Offering to the Restriction Termination Date, any Transfer or Non-Transfer Event that, if effective, would result in any class of Equity Shares being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution) shall be void AB INITIO as to the Transfer or Non-Transfer Event affecting that number of shares which would be otherwise beneficially owned (determined without reference to any rules of attribution) by the transferee, and the intended transferee shall acquire no rights in such Equity Shares. (c) From the date of the Initial Public Offering to the Restriction Termination Date, any Transfer of or Non-Transfer Event affecting Equity Shares that, if effective, would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Internal Revenue Code shall be void AB INITIO as to the Transfer of or Non-Transfer Event affecting that number of Equity Shares which would cause the Corporation to be "closely held" within the meaning of Section 856(h) of the Internal Revenue Code, and the intended transferee shall acquire no rights in such Equity Shares. (d) From the date of the Initial Public Offering to the Restriction Termination Date, any Transfer of or Non-Transfer Event affecting Equity Shares that, if effective, would cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the real property of the Corporation or of any direct or indirect subsidiary of the Corporation (a "Subsidiary"), within the meaning of Section 856(d)(2)(B) of the Internal Revenue Code, shall be void AB INITIO as to the Transfer of or Non-Transfer Event affecting that number of Equity Shares which would cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation's or of a Subsidiary's real property, within the meaning of Section 856(d)(2)(B) of the Internal Revenue Code, and the intended transferee shall acquire no rights in such excess Equity Shares. Section 3. TRANSFER TO TRUST. (a) If, notwithstanding the other provisions contained in this Division C, at any time after the Initial Public Offering and prior to the Restriction Termination Date there is a purported Transfer or Non-Transfer Event such that any Person would either Beneficially Own or Constructively Own Equity Shares in excess of the Ownership Limit, then, (i) except as set forth in Section 7 below, the purported transferee shall acquire no right or interest (or, in the case of a Non-Transfer Event, the Person holding record title to the Equity Shares Beneficially Owned or Constructively Owned by such Beneficial Owner or Constructive Owner, shall cease to own any right or interest) in such number of Equity Shares which would cause such Beneficial Owner or Constructive Owner to Beneficially Own or Constructively Own Equity Shares in excess of the Ownership Limit, (ii) such number of Equity Shares in excess of the Ownership Limit (rounded up to the nearest whole share) shall be designated Shares-in-Trust and, in accordance with this Division C, transferred automatically by operation of the terms of this Section IV.C.I.3. to a Trust to be held in accordance with this Division C, and (iii) the Prohibited Owner shall submit such number of Equity Shares to the Corporation for registration in the name of the Trustee. Such transfer to a Trust and the designation of shares as Shares-in-Trust shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event, as the case may be. (b) If, notwithstanding the other provisions contained in this Division C, at any time after the Initial Public Offering and prior to the Restriction Termination Date, there is a purported Transfer or Non-Transfer Event that, if effective, would (i) result in any class of the Equity Shares being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution), (ii) result in the Corporation being "closely held" within the meaning of Section 856(h) of the Internal Revenue Code, or (iii) cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation's or of a Subsidiary's real property, within the meaning of Section 856(d)(2)(B) of the 15 Internal Revenue Code, then (x) the purported transferee shall not acquire any right or interest (or, in the case of a Non-Transfer Event, the Person holding record title to the Equity Shares with respect to which such Non-Transfer Event occurred, shall cease to own any right or interest) in such number of Equity Shares, the ownership of which by such purported transferee or record holder would (A) result in any class of Equity Shares being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution), (B) result in the Corporation being "closely held" within the meaning of Section 856(h) of the Internal Revenue Code, or (C) cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation's or of a Subsidiary's real property, within the meaning of Section 856(d)(2)(B) of the Internal Revenue Code, (y) such number of Equity Shares (rounded up to the nearest whole share) shall be designated Shares-in-Trust and, in accordance with this Division C, transferred automatically by operation of the terms of this Section IV.C.I.3. to a Trust to be held in accordance with this Division C, and (z) the Prohibited Owner shall submit such number of Equity Shares to the Corporation for registration in the name of the Trustee. Such transfer to a Trust and the designation of shares as Shares-in-Trust shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event, as the case may be. Section 4. REMEDIES FOR BREACH. If the Corporation, or its designee, shall at any time determine in good faith that a Transfer or Non-Transfer Event has taken place in violation of this Division C or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any Equity Shares in violation of this Division C, the Corporation shall take such action as it considers advisable to refuse to give effect to or to prevent such Transfer or Non-Transfer Event or acquisition, including, but not limited to, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or Non-Transfer Event or acquisition. Section 5. NOTICE OF RESTRICTED TRANSFER. Any Person who acquires or attempts to acquire Equity Shares in violation of this Division C, or any Person who owned Equity Shares that were transferred to a Trust pursuant to this Division C, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such event on the Corporation's status as a REIT. Section 6. OWNERS REQUIRED TO PROVIDE INFORMATION. From the date of the Initial Public Offering to the Restriction Termination Date: (a) Every Beneficial Owner or Constructive Owner of more than 5%, or such lower percentage as is specified pursuant to regulations issued under the Internal Revenue Code, of the outstanding shares of any class of shares of the Corporation shall, within 30 days after January 1 of each year, provide to the Corporation a written statement or affidavit stating the name and address of such Beneficial Owner or Constructive Owner, the number of Equity Shares Beneficially Owned or Constructively Owned, and a description of how such shares are held. (b) Each Person who is a Beneficial Owner or Constructive Owner of Equity Shares and each Person (including the shareholder of record) who is holding Equity Shares for a Beneficial Owner or Constructive Owner shall provide to the Corporation a written statement or affidavit stating such information as the Corporation may request in order to determine the Corporation's status as a REIT and to ensure compliance with the Ownership Limit as applicable. Section 7. EXCEPTIONS. The Ownership Limit shall not apply to the acquisition of Equity Shares by an underwriter that participates in a public offering of such shares for a period of 90 days following the purchase by such underwriter of such shares. In addition, the Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of counsel, in either case to the effect that the Corporation's status as a REIT would not be jeopardized thereby, may allow a Person to own a certain amount in excess of the Ownership Limit if (i) the Board of Directors obtains such representations and undertakings from such Person as are reasonably necessary to ascertain that no Person's Beneficial 16 Ownership or Constructive Ownership of Equity Shares could result in the REIT (a) losing its REIT status for federal income tax purposes, or (b) being "related" to any tenant or lessee under the REIT rules of the Internal Revenue Code, and (ii) such Person agrees in writing that any violation or attempted violation that could cause such a result will cause a transfer to a Trust of Equity Shares pursuant to this Division C. Section 8. NEW YORK STOCK EXCHANGE TRANSACTIONS. Notwithstanding any provision contained herein to the contrary, nothing in these Amended and Restated Articles of Incorporation shall preclude the settlement of any transaction entered into through the facilities of the New York Stock Exchange. II. SHARES-IN-TRUST. Section 1. TRUST. Any Equity Shares transferred to a Trust and designated Shares-in-Trust pursuant to this Division C shall be held for the exclusive benefit of the Beneficiary. The Corporation shall name a Beneficiary for each Trust within five days after the Corporation first has actual notice of the existence thereof. Any transfer to a Trust, and designation of Equity Shares as Shares-in-Trust, shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event that results in the transfer to the Trust. Shares-in-Trust shall continue to constitute issued and outstanding Equity Shares of the Corporation and shall be entitled to the same rights and privileges as are all other issued and outstanding Equity Shares of the same class and series. When transferred to a Permitted Transferee in accordance with this Division C, such Shares-in-Trust shall cease to be designated as Shares-in-Trust. Section 2. DIVIDEND RIGHTS. The Trust, as record holder of Shares-in-Trust, shall be entitled to receive all dividends and distributions declared by the Board of Directors on such Shares-in-Trust and shall hold such dividends and distributions in trust for the benefit of the Beneficiary. The Prohibited Owner with respect to Shares-in-Trust shall repay to the Trust the amount of any dividends or distributions received by it that (i) are attributable to those Shares-in-Trust and (ii) the record date of which was on or after the date that such shares became Shares-in-Trust. The Corporation shall take all measures that it determines reasonably necessary to recover the amount of any such dividend or distribution paid to a Prohibited Owner, including, if necessary, withholding any portion of future dividends or distributions payable on Equity Shares Beneficially Owned or Constructively Owned by the Person who, but for the provisions of this Division C, would Constructively Own or Beneficially Own the Shares-in-Trust; and, as soon as reasonably practicable following the Corporation's receipt or withholding thereof, shall pay over to the Trust for the benefit of the Beneficiary the dividends so received or withheld, as the case may be. Section 3. RIGHTS UPON LIQUIDATION. In the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation, each holder of Shares-in-Trust shall be entitled to receive, ratably with each other holder of Equity Shares of the same class or series, that portion of the assets of the Corporation which is available for distribution to the holders of such class and series of Equity Shares. The Trust shall distribute to the Prohibited Owner the amounts received upon such liquidation, dissolution, or winding up, or distribution; PROVIDED, HOWEVER, that the Prohibited Owner shall not be entitled to receive amounts pursuant to this Division C in excess of, in the case of a purported Transfer in which the Prohibited Owner gave value for Equity Shares and which Transfer resulted in the transfer of the shares to the Trust, the price per share, if any, such Prohibited Owner paid for the Equity Shares and, in the case of a Non-Transfer Event or Transfer in which the Prohibited Owner did not give value for such shares (E.G., if the shares were received through a gift or devise) and which Non-Transfer Event or Transfer, as the case may be, resulted in the transfer of shares to the Trust, the price per share equal to the Market Price on the date of such Non-Transfer Event or Transfer. Any remaining amount in such Trust shall be distributed to the Beneficiary. 17 Section 4. VOTING RIGHTS. The Trustee shall be entitled to vote all Shares-in-Trust. Any vote by a Prohibited Owner as a holder of Equity Shares prior to the discovery by the Corporation that the Equity Shares are Shares-in-Trust shall, so far as is practicable under applicable law, be rescinded and shall be void AB INITIO with respect to such Shares-in-Trust and the Prohibited Owner shall be deemed to have given, as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event that results in the transfer to the Trust of Equity Shares pursuant to this Division C, an irrevocable proxy to the Trustee to vote the Shares-in-Trust in the manner in which the Trustee, in its sole and absolute discretion, considers advisable. Section 5. DESIGNATION OF PERMITTED TRANSFEREE. The Trustee shall have the exclusive and absolute right to designate a Permitted Transferee of any Shares-in-Trust. In an orderly fashion so as not to materially adversely affect the Market Price of the Shares-in-Trust, the Trustee shall designate a Person as Permitted Transferee, so long as (i) the Permitted Transferee so designated purchases for valuable consideration (whether in a public or private sale) the Shares-in-Trust and (ii) the Permitted Transferee so designated can acquire such Shares-in-Trust without such acquisition resulting in a transfer to a Trust and the redesignation of such Equity Shares as Shares-in-Trust. Upon the designation by the Trustee of a Permitted Transferee, the Trustee shall (i) cause to be transferred to the Permitted Transferee that number of Shares-inTrust acquired by the Permitted Transferee, (ii) cause to be recorded on the books of the Corporation that the Permitted Transferee is the holder of record of such number of Equity Shares, (iii) cause the Shares-in-Trust to be canceled, and (iv) distribute to the Beneficiary any and all amounts held by the Trustee with respect to the Shares-in-Trust after making any payment to the Prohibited Owner required under Sections IV.C.II.3. and IV.C.II.6. Section 6. COMPENSATION TO RECORD HOLDER OF EQUITY SHARES THAT BECOME SHARES-IN-TRUST. Any Prohibited Owner shall be entitled (following designation of Equity Shares proposed or purported to be held by that Prohibited Owner as Shares-in-Trust and subsequent designation of a Permitted Transferee or the Trustee's acceptance of an offer to purchase such shares) to receive from the Trustee following the sale or other disposition of such Shares-in-Trust the lesser of (i) in the case of (a) a purported Transfer in which the Prohibited Owner gave value for Equity Shares and which Transfer resulted in the transfer of the shares to the Trust, the price per share, if any, such Prohibited Owner paid for the Equity Shares, or (b) a Non-Transfer Event or Transfer in which the Prohibited Owner did not give value for such shares (E.G., if the shares were received through a gift or devise) and which Non-Transfer Event or Transfer, as the case may be, resulted in the transfer of shares to the Trust, the price per share equal to the Market Price on the date of such Non-Transfer Event or Transfer, and (ii) the price per share received by the Trustee from the sale or other disposition of such Shares-in-Trust. Any amounts received by the Trustee in respect of such Shares-in-Trust and in excess of such amounts to be paid to the Prohibited Owner shall be distributed to the Beneficiary. Each Beneficiary and Prohibited Owner waive any and all claims that they may have against the Trustee and the Trust arising out of the disposition of Shares-in-Trust, except for claims arising out of the gross negligence or willful misconduct of, or any failure to make payments in accordance with this Division C, by such Trustee or the Corporation. Section 7. PURCHASE RIGHT IN SHARES-IN-TRUST. Shares-in-Trust shall be considered to have been offered for sale to the Corporation, or its designee, on the date of the event that created such Shares-in-Trust status at a price per share equal to the lesser of (i) the price per share in the event that created such Shares-in-Trust status (or, in the case of a devise, gift or Non-Transfer Event, the Market Price at the time of such devise, gift or Non-Transfer Event) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of ninety days after the later of (i) the date of the event which created such Shares-in-Trust status and (ii) the date the Corporation determines in good faith that an event occurred that created such Shares-in-Trust status, if the Corporation does not receive a notice of such event. 18 III. REMEDIES NOT LIMITED. Subject to Article I, Sections 7 and 8, nothing contained in this Division C shall limit the authority of the Corporation to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its shareholders by preservation of the Corporation's status as a REIT and to ensure compliance with the Ownership Limit. IV. AMBIGUITY. In the case of any ambiguity in the application of any provision of this Division C, including any definition contained herein, the Board of Directors shall have the power to determine the application of that provision. V. LEGEND. Each certificate for Equity Shares shall bear the following legend: "The [Common Shares or Cumulative Preferred Shares or Noncumulative Preferred Shares] represented by this certificate are subject to restrictions on transfer for the purpose of the Corporation's maintenance of its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the "Code"). No Person may (i) Beneficially Own or Constructively Own Common Shares in excess of 9% of the number of outstanding Common Shares, (ii) Beneficially Own or Constructively Own shares of any class or series of Preferred Shares in excess of 9% of the number of outstanding shares of that class or series of Preferred Shares, (iii) beneficially own Equity Shares that would result in the Equity Shares being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution), (iv) Beneficially Own Equity Shares that would result in the Corporation being "closely held" under Section 856(h) of the Code, or (v) Constructively Own Equity Shares that would cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation's or of a Subsidiary's real property, within the meaning of Section 856(d)(2)(B) of the Code. Each holder of Equity Shares is required to furnish the Corporation such information as the Corporation may request pursuant to Section 6 of the Corporation's Amended and Restated Articles of Incorporation. Any Person who attempts to Beneficially Own or Constructively Own Equity Shares in excess of the above limitations must immediately notify the Corporation in writing. If those restrictions are violated, the Equity Shares represented hereby in excess of those limitations will be transferred automatically by operation of the Corporation's Amended and Restated Articles of Incorporation to a Trust and will be designated Shares-in-Trust. All capitalized terms in this legend have the meanings defined in the Corporation's Amended and Restated Articles of Incorporation, as they may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each shareholder who so requests." VI. SEVERABILITY. Each provision of this Article FOURTH shall be several, and an adverse determination as to any such provision shall in no way affect the validity of any other provision. FIFTH: At all times following the consummation of the Initial Public Offering (as defined in Article FOURTH), at least a majority of the members of the Board of Directors shall, except as may result from a vacancy or vacancies therein, be Independent Directors. An "Independent Director" shall mean a person who is (i) independent of management of the Corporation, (ii) not employed by or an officer of the Corporation, (iii) not an "affiliate" (as defined in Rule 405 under the Securities Act of 1933, as amended) of the Corporation or of any Subsidiary of the Corporation, and (iv) not a person who acts on a regular basis as an individual or representative of an organization serving as a professional advisor, legal counsel or consultant to management if, in the opinion of the Board of Directors, the relationship is material to the Corporation, that person, or the organization represented. Any determination to be made by the Board of 19 Directors in connection with any matter presenting a conflict of interest for any officer of the Corporation or any director of the Corporation who is not an Independent Director shall be made by the Independent Directors. SIXTH: No holder of shares of the Corporation of any class shall be entitled as such, as a matter of right, to subscribe for or purchase shares of any class, now or hereafter authorized, or to subscribe for or purchase securities convertible into or exchangeable for shares of the Corporation or to which shall be attached or appertain any warrants or rights entitling the holder thereof to subscribe for or purchase shares, except such rights of subscription or purchase, if any, for such considerations and upon such terms and conditions as its Board of Directors from time to time may determine. SEVENTH: Notwithstanding any provision of Sections 1701.01 to 1701.98, inclusive, of the Ohio Revised Code, or any successor statutes now or hereafter in force, requiring for the authorization or taking of any action the vote or consent of the holders of shares entitling them to exercise two-thirds or any other proportion of the voting power of the Corporation or of any class or classes of shares thereof, such action, unless otherwise expressly required by law or these Amended and Restated Articles of Incorporation, may be authorized or taken by the vote or consent of the holders of shares entitling them to exercise a majority of the voting power of the Corporation or of such class or classes of shares thereof. EIGHTH: To the extent permitted by law, the Corporation, by action of its Board of Directors, may purchase or otherwise acquire shares of any class issued by it at such times, for such consideration and upon such terms and conditions as its Board of Directors may determine. NINTH: No person who is serving or has served as a director of the Corporation shall be personally liable to the Corporation or any of its shareholders for monetary damages for breach of any fiduciary duty of such person as a director by reason of any act or omission of such person as a director; but the foregoing provision shall not eliminate or limit the liability of any person (a) for any breach of such person's duty of loyalty as a director to the Corporation or its shareholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 1701.95 of the Ohio Revised Code, (d) for any transaction from which such person derived any improper personal benefit, or (e) to the extent that such liability may not be limited or eliminated by virtue of Section 1701.13 of the Ohio Revised Code or any successor section or statute. Any repeal or modification of this Article NINTH by the shareholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. TENTH: Section 1701.831 of the Ohio Revised Code shall not apply to the Corporation. ELEVENTH: Chapter 1704 of the Ohio Revised Code shall not apply to the Corporation. TWELFTH: If any provision (or portion thereof) of these Amended and Restated Articles of Incorporation shall be found to be invalid, prohibited, or unenforceable for any reason, the remaining provisions (or portions thereof) of these Amended and Restated Articles of Incorporation shall remain in full force and effect, and shall be construed as if such invalid, prohibited, or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the Corporation and its shareholders that each such remaining provision (or portion thereof) of these Amended and Restated Articles of Incorporation remain, to the fullest extent permitted by law, applicable and enforceable as to all shareholders, notwithstanding any such finding. THIRTEENTH: No shareholder of the Corporation may cumulate his voting power in the election of directors. 20 FOURTEENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Amended and Restated Articles of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon shareholders herein are granted subject to this reservation. FIFTEENTH: These Amended and Restated Articles of Incorporation shall take the place of and supersede the Corporation's existing Articles of Incorporation. 21 CERTIFICATE OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF BOYKIN LODGING COMPANY Robert A. Weible, Secretary, of Boykin Lodging Company, an Ohio corporation (the "Corporation"), does hereby certify that the Executive Committee of the Board of Directors of the Corporation adopted the following resolution to amend the Amended and Restated Articles of Incorporation (the "Articles") of the Corporation by written action pursuant Section 1701.63(D) of the Ohio Revised Code and pursuant to the authority granted by Section 1701.70(B)(1) of the Ohio Revised Code and Section I.1. of Division A of the Articles: RESOLVED, that the Amended and Restated Articles of Incorporation of the Corporation be, and they hereby are, amended by adding at the end of Division A.I. of Article FOURTH a new Section 6 that reads as follows: SECTION 6. CLASS A CUMULATIVE PREFERRED SHARES, SERIES 1999-A. A. DESIGNATION AND AMOUNT. Of the 5,000,000 authorized Class A Cumulative Preferred Shares, 75,000 are designated as "Class A Cumulative Preferred Shares, Series 1999-A" (the "Series 1999-A Preferred Shares"). The Series 1999-A Preferred Shares have the express terms set forth in this Division as being applicable to all Class A Cumulative Preferred Shares as a class and, in addition, the following express terms. The number of Series 1999-A Preferred Shares may be increased or decreased by resolution of the Board of Directors and by the filing of a certificate of amendment pursuant to the General Corporation Law of the State of Ohio stating that the increase or reduction has been so authorized, but no decrease may reduce the number of Series 1999-A Preferred Shares to a number less than that of the Series 1999-A Preferred Shares then outstanding plus the number of Series 1999-A Preferred Shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Corporation. B. DIVIDENDS AND DISTRIBUTIONS. (1) Subject to the rights of the holders of any series of preferred shares (or any similar shares) ranking prior to the Series 1999-A Preferred Shares with respect to dividends, the holders of Series 1999-A Preferred Shares, in preference to the holders of Common Shares and of any other shares ranking junior to the Series 1999-A Preferred Shares, will be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, (1) quarterly dividends payable in cash on the same day as the quarterly dividend payment date for any regular quarterly dividend payable on the Common Shares with respect to the same period or, if no such regular quarterly dividend is payable on the Common Shares, on the fifth day of May, August, November and February in each year (each such date, a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a Series 1999-A Preferred Share or fraction thereof, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $47.00 or (b) subject to adjustment as hereinafter set forth, 100 times the per share amount of all regular quarterly cash dividends, and 100 times the per share value of all regular quarterly noncash dividends or other distributions (as determined by the Board of Directors in good faith), other than any dividend payable in Common Shares or a subdivision of the outstanding Common Shares (by reclassification or otherwise), declared on the Common Shares with respect to the same period, and (2) if a dividend or distribution 22 other than a regular quarterly dividend and other than a dividend payable in Common Shares or a subdivision of the outstanding Common Shares (by reclassification or otherwise) is authorized, declared or paid to the holders of Common Shares (including without limitation a dividend or distribution of cash, rights, options or other securities or any noncash property), a per share cash dividend in an amount equal to the value of the per share amount payable on each Common Share (as determined by the Board of Directors in good faith) multiplied by the Dividend Multiple (as defined below), payable on the same day as the payment date for that dividend on the Common Shares. The multiple of dividends declared on the Common Shares to which holders of the Series 1999-A Preferred Shares are entitled, which is 100 initially but which will be adjusted from time to time as hereinafter provided, is hereinafter referred to as the "Dividend Multiple." If the Company at any time after February 1, 1999: (i) declares or pays any dividend on the Common Shares payable in Common Shares, or (ii) effects a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such case the Dividend Multiple will thereafter be the Dividend Multiple applicable immediately prior to that event multiplied by a fraction, the numerator of which is the number of Common Shares outstanding immediately after that event and the denominator of which is the number of Common Shares that were outstanding immediately prior to that event. (2) The Board of Directors may fix in accordance with applicable law a record date for the determination of holders of Series 1999-A Preferred Shares entitled to receive payment of a dividend or other distribution declared thereon, which will be the same day as the record date for any dividend or distribution payable on the Common Shares with respect to the same period if any such dividend or distribution is so payable. Dividends on the Series 1999-A Preferred Shares will accrue and be cumulative (i) with respect to shares included in the initial issuance of Series 1999-A Preferred Shares and shares issued any time thereafter to and including the record date for the payment of the first dividend on the shares included in that initial issuance (the "First Record Date"), from the date of that initial issuance, (ii) with respect to shares issued any time after the First Record Date and not between a record date and the dividend payment date to which that record date applies (that period, the "Ex-dividend Period"), from the dividend payment date immediately preceding the date of issue of those shares, and (iii) with respect to shares issued after the First Record Date and during an Ex-dividend Period, from the dividend payment date on which that Ex-dividend Period ends. Accrued but unpaid dividends will not bear interest. Dividends paid on the Series 1999-A Preferred Shares in an amount less than the total amount of dividends at the time accrued and payable on those shares will be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The amount of accrued and unpaid dividends on any Series 1999-A Preferred Share at any date is the amount of any dividends payable thereon in accordance with this Section 6.B. (whether or not declared) that have not been paid. C. REDEMPTION. The Series 1999-A Preferred Shares are redeemable, in whole but not in part, in accordance with Section 3 of Division A.1.of Article FOURTH, at any time on or after (but not before) the fifth anniversary of the initial issuance of a Series 1999-A Preferred Share, at the option of the Board of Directors, upon payment of an amount in cash for each share redeemed equal to the Conversion Multiple (as defined in Section E.1., below) times the Adjusted Share Price, together with all accrued and unpaid dividends thereon to the redemption date (the "Redemption Price"). The Board of Directors may, at its option, pay all or any portion of the Redemption Price for any Series 1999-A Preferred Shares redeemed in accordance with this Section 6.C. by delivering to the holder thereof the number of Common Shares derived by dividing the portion of the redemption price to be so paid by the Adjusted Share Price, so long as that form of payment will not result in the holder beneficially owning more than nine percent (9.0%) of the total number of the outstanding Common Shares (determined pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended), or violating Division C of this Article FOURTH, whichever is more restrictive. For purposes of this Section 6.C., "Adjusted Share Price" means a dollar amount equal to the average last sale price (or bid price if there were no sales) per Common Share on the NYSE over the twenty-one (21) days on which the NYSE is open and for which 23 trades in Common Shares are reported immediately preceding the date on which the Corporation delivers the applicable redemption notice (adjusted to take into account any splits, combinations, reclassifications, or other changes in the Corporation's capitalization that occur between the date of that notice and the redemption date). If the Common Shares are no longer trading on the NYSE, then the Adjusted Share Price will be determined using the prices reported on the exchange or automated quotation system on which the Common Shares then trade. Each holder of Series 1999-A Preferred Shares may exercise the conversion rights described in Section 6.E. for those shares at any time prior to the date set for redemption of those shares. D. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution may be made (x) to the holders of shares ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series 1999-A Preferred Shares unless, prior thereto, the holders of Series 1999-A Preferred Shares shall have received an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an amount equal to the greater of (1) $1,648.00 per share or (2) an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Shares, or (y) to the holders of shares ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series 1999-A Preferred Shares, except distributions made ratably on the Series 1999-A Preferred Shares and all other such parity shares in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up (the holders of Series 1999-A Preferred Shares being entitled to receive, for this purpose, the amount determined pursuant to clause (x) of this sentence). If the Corporation at any time after February 1, 1999 (i) declares or pays any dividend on Common Shares payable in Common Shares, or (ii) effects a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such case the aggregate amount per share to which holders of Series 1999-A Preferred Shares were entitled immediately prior to such event under clause (x)(2) of the immediately preceding sentence will be adjusted by multiplying that amount by a fraction, the numerator of which is the number of Common Shares outstanding immediately after that event and the denominator of which is the number of Common Shares that were outstanding immediately prior to that event. Neither the consolidation of nor merger of the Corporation with or into any other corporation or corporations, nor the sale or other transfer of all or substantially all of the assets of the Corporation, will be considered a liquidation, dissolution or winding up of the Corporation within the meaning of this paragraph D. E. CONVERSION RIGHTS. (1) The holders of Series 1999-A Preferred Shares have the right, at their option, to convert all or any portion of their Series 1999-A Preferred Shares into Common Shares at any time and from time to time, on the basis set forth below, but (a) no such holder may so convert Series 1999-A Preferred Shares if, immediately after that conversion, that holder would be the record or beneficial owner of more than nine percent (9.0%) of the total number of the outstanding Common Shares (determined pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended), or violate Division C of this Article FOURTH, whichever is more restrictive, and (b) the right to convert Series 1999-A Preferred Shares that have been called for redemption pursuant to Section 6.C. terminates at the close of business on the redemption date for those Series 1999-A Preferred Shares pursuant to Section 6.C., unless the Corporation defaults in making payment of any cash payable on that redemption. Each Series 1999-A Preferred Share is initially convertible into 100 Common Shares (the number of Common Shares into which each Series 1999-A Preferred Share is convertible, the "Conversion Multiple"). If the Corporation, at any time after February 1, 1999: (i) declares or pays any dividend on the Common Shares payable in 24 Common Shares, or (ii) effects a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such case the Conversion Multiple will thereafter be the Conversion Multiple applicable immediately prior to that event multiplied by a fraction, the numerator of which is the number of Common Shares outstanding immediately after that event and the denominator of which is the number of Common Shares that were outstanding immediately prior to that event. (2) In order for a holder of Series 1999-A Preferred Shares to convert Series 1999-A Preferred Shares into Common Shares, that holder shall surrender the certificate or certificates for those Series 1999-A Preferred Shares at the office of the transfer agent for the Series 1999-A Preferred Shares (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that the holder elects to convert all or any number of the Series 1999-A Preferred Shares represented by that certificate or certificates. That notice must state the holder's name or the names of the nominees in which the holder wishes the certificate or certificates for Common Shares to be issued and the number of Series 1999-A Preferred Shares to be converted. If required by the Corporation, certificates surrendered for conversion must be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his or its attorney duly authorized in writing. The date of receipt of those certificates and notice by the transfer agent or by the Corporation (if the Corporation serves as its own transfer agent) will be the conversion date (the "Conversion Date") and the conversion will be effective as of the close of business on the Conversion Date. The Corporation shall, as soon as practicable after the Conversion Date, issue and deliver at that office, or send, on the converting holder's written instruction, to that holder or to his or its nominees, a certificate or certificates for the number of Common Shares to which that holder is entitled, together with cash in lieu of any fraction of a share. (3) The Corporation shall at all times when any Series 1999-A Preferred Shares are outstanding, reserve and keep available out of its authorized but unissued shares, for the purpose of effecting the conversion of the Series 1999-A Preferred Shares, such number of its duly authorized Common Shares as are from time to time sufficient to effect the conversion of all outstanding Series 1999-A Preferred Shares. (4) Upon any conversion effected in accordance with this Section 6.E., the Corporation shall pay all accrued and unpaid dividends on the Series 1999-A Preferred Shares surrendered for conversion. (5) All Series 1999-A Preferred Shares that have been surrendered for conversion as herein provided will no longer be considered outstanding, and all rights with respect to those shares, including the rights, if any, to receive notices and to vote, will cease and terminate at the close of business on the Conversion Date, except only the right of the holders thereof to receive Common Shares in exchange therefor and the dividend payment provided for in paragraph (4), above. If certificates representing more than one Series 1999-A Preferred Share are surrendered for conversion at one time by the same holder, the number of Common Shares issuable on conversion thereof will be computed on the basis of the aggregate number of Series 1999-A Preferred Shares so surrendered. F. FRACTIONAL SHARES. Series 1999-A Preferred Shares may be issued in whole shares or in any fraction of a share, which will entitle the holder, in proportion to that holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of holders of Series 1999-A Preferred Shares. In lieu of issuing fractional shares of less than one one-hundredth (1/100) of a Preferred Share, the Corporation may elect to make a cash payment in an amount equal to the same fraction of the last sale price (or bid price if there were no sales) per Common Share on the New York Stock Exchange on the business day that immediately precedes the Conversion Date or, if the Common Shares are not the listed on the New York Stock Exchange, of the market price 25 per share determined using the prices reported on the exchange or automated quotation system on which the Common Shares then trade, as equitably adjusted to reflect any change or adjustment to the Conversion Multiple after February 1, 1999. G. CERTAIN TRANSACTIONS. If the Corporation is a party to any transaction (including without limitation a merger, consolidation, statutory share exchange, self tender offer for all or substantially all Common Shares outstanding, sale of all or substantially all of the Corporation's assets or recapitalization of the Common Shares but excluding the payment of any dividend payable in Common Shares or a subdivision, combination or consolidation of the outstanding Common Shares (by reclassification or otherwise)) (each of the foregoing being referred to herein as a "Transaction"), in each case as a result of which Common Shares are converted into the right to receive shares, securities or other property (including cash or any combination thereof), each Series 1999-A Preferred Share that is not redeemed or converted into the right to receive shares, securities or other property in connection with that Transaction will thereafter be convertible into the kind and amount of shares, securities and other property (including cash or any combination thereof) receivable upon the consummation of that Transaction by a holder of that number of Common Shares into which one Series 1999-A Preferred Share was convertible immediately prior to that Transaction, assuming that holder of Common Shares (i) is not a Person with which the Corporation consolidated or into which the Corporation merged or that merged into the Corporation or to which that sale or transfer was made, as the case may be (a "Constituent Person"), or an affiliate of a Constituent Person and (ii) failed to exercise his or her rights of election, if any, as to the kind or amount of shares, securities and other property (including cash) receivable upon that Transaction (but if the kind or amount of shares, securities and other property (including cash) receivable upon that Transaction is not the same for each Common Share held immediately prior to that Transaction by other than a Constituent Person or an affiliate thereof and in respect of which those rights of election have not been exercised ("Non-Electing Share"), then for the purpose of this Section 6.G., the kind and amount of shares, securities and other property (including cash) receivable upon that Transaction by each Non-Electing Share will be considered to be the kind and amount so receivable per share by a plurality of the Non-Electing Shares). The Corporation shall not be a party to any Transaction unless the terms of that Transaction are consistent with the provisions of this Section 6.G. and it shall not consent or agree to the occurrence of any Transaction until the Corporation has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Series 1999-A Preferred Shares that will contain provisions enabling the holders of the Series 1999-A Preferred Shares that remain outstanding after that Transaction to convert their Series 1999-A Preferred Shares into the consideration received by holders of Common Shares at the Conversion Multiple in effect immediately prior to that Transaction. The provisions of this Section 6.G. similarly apply to successive Transactions. H. NOTICE. Whenever the Dividend Multiple or the Conversion Multiple is adjusted as herein provided, the Corporation shall promptly deliver to each holder of the Series 1999-A Preferred Shares, at that holder's last address shown on the share records of the Corporation, a notice of that adjustment, setting forth the adjusted Dividend Multiple or Conversion Multiple, as applicable, and the effective date of that adjustment and a brief statement of the facts requiring that adjustment. 26 IN WITNESS WHEREOF, the undersigned has executed this instrument as of February 1, 1999. /s/ Robert A. Weible ------------------------------------ Robert A. Weible, Secretary Boykin Lodging Company 27 CERTIFICATE OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF BOYKIN LODGING COMPANY Paul A. O'Neil, Treasurer, and Andrew A. Alexander, Assistant Secretary, of Boykin Lodging Company, an Ohio corporation (the "Company"), do hereby certify that at a meeting of the Board of Directors of the Company held on May 25, 1999, the following resolution to amend the Amended and Restated Articles of Incorporation, as amended, of the Company was adopted pursuant to the authority granted by Section 1701.70(B)(1) of the Ohio Revised Code: RESOLVED, that the Amended and Restated Articles of Incorporation, as amended, of the Company be, and they hereby are, amended by adding at the end of Division A-II of Article FOURTH a new Section 6 that reads as follows: SECTION 6. CLASS A SERIES 1999-A NONCUMULATIVE PREFERRED SHARES. (a) DESIGNATION AND AMOUNT. Of the 5,000,000 authorized Class A Noncumulative Preferred Shares, without par value, 500,000 are designated as a series designated as "Class A Series 1999-A Noncumulative Preferred Shares" (the "Series 1999-A Noncumulative Preferred Shares"). The Series 1999-A Noncumulative Preferred Shares have the express terms set forth in this Division as being applicable to all Preferred Shares as a class and, in addition, the following express terms applicable to all Series 1999-A Noncumulative Preferred Shares as a series of Preferred Shares. The number of Series 1999-A Noncumulative Preferred Shares may be increased or decreased by resolution of the Board of Directors and by the filing of a certificate of amendment pursuant to the provisions of the General Corporation Law of the State of Ohio stating that such increase or reduction has been so authorized; however, no decrease shall reduce the number of Series 1999-A Noncumulative Preferred Shares to a number less than that of the Series 1999-A Noncumulative Preferred Shares then outstanding plus the number of Series 1999-A Noncumulative Preferred Shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Company. (b) DIVIDENDS AND DISTRIBUTIONS. (1)(i) Subject to the rights of the holders of any series of preferred shares (or any similar shares) ranking prior to the Series 1999-A Noncumulative Preferred Shares with respect to dividends, the holders of Series 1999-A Noncumulative Preferred Shares, in preference to the holders of Common Shares and of any other junior shares, will be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a Series 1999-A Noncumulative Share or fraction thereof, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provisions for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all noncash dividends or other distributions other than a dividend payable in Common Shares or a subdivision of the outstanding Common Shares (by reclassification or otherwise), declared on the Common Shares after the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend 28 Payment Date, after the first issuance of any Series 1999-A Noncumulative Share or fraction thereof. The multiple of cash and noncash dividends declared on the Common Shares to which holders of the Series 1999-A Noncumulative Preferred Shares are entitled, which is 1,000 initially but which will be adjusted from time to time as hereinafter provided, is hereinafter referred to as the "Dividend Multiple." If the Company at any time after May 25, 1999 (the "Rights Declaration Date"): (i) declares or pays any dividend on the Common Shares payable in Common Shares, or (ii) effects a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such case the Dividend Multiple thereafter applicable to the determination of the amount of dividends that holders of Series 1999-A Noncumulative Preferred Shares are entitled to receive will be the Dividend Multiple applicable immediately prior to that event multiplied by a fraction, the numerator of which is the number of Common Shares outstanding immediately after that event and the denominator of which is the number of Common Shares that were outstanding immediately prior to that event. (ii) Notwithstanding anything else contained in this paragraph (1), the Company shall, out of funds legally available for that purpose, declare a dividend or distribution on the Series 1999-A Noncumulative Preferred Shares as provided in this paragraph (1) immediately after it declares a dividend or distribution on the Common Shares (other than a dividend payable in Common Shares); but if no dividend or distribution has been declared on the Common Shares during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series 1999-A Noncumulative Preferred Shares shall nevertheless accrue on such subsequent Quarterly Dividend Payment Date. (2) Dividends will begin to accrue and be cumulative on outstanding Series 1999-A Noncumulative Preferred Shares from the Quarterly Dividend Payment Date next preceding the date of issue of such Series 1999-A Noncumulative Preferred Shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares will begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of Series 1999-A Noncumulative Preferred Shares entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends will begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends will not bear interest. Dividends paid on the Series 1999-A Noncumulative Preferred Shares in an amount less than the total amount of such dividends at the time accrued and payable on such shares will be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix in accordance with applicable law a record date for the determination of holders of Series 1999-A Noncumulative Preferred Shares entitled to receive payment of a dividend or distribution declared thereon, which record date will be not more than such number of days prior to the date fixed for the payment thereof as may be allowed by applicable law. (c) REACQUIRED SHARES. Any Series 1999-A Noncumulative Preferred Shares purchased or otherwise acquired by the Company in any manner whatsoever will be retired and canceled promptly after the acquisition thereof. All such shares will upon their cancellation become authorized but unissued preferred shares and may be reissued as part of a new series of Preferred Shares to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. (d) LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Company, no distribution may be made (x) to the holders of shares ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series 29 1999-A Noncumulative Preferred Shares unless, prior thereto, the holders of Series 1999-A Noncumulative Preferred Shares shall have received an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an amount equal to the greater of (1) $1,000.00 per share or (2) an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of Common Shares, or (y) to the holders of shares ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series 1999-A Noncumulative Preferred Shares, except distributions made ratably on the Series 1999-A Noncumulative Preferred Shares and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. If the Company at any time after the Rights Declaration Date (i) declares or pays any dividend on Common Shares payable in Common Shares, or (ii) effects a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such case the aggregate amount per share to which holders of Series 1999-A Noncumulative Preferred Shares were entitled immediately prior to such event under clause (x) of the preceding sentence will be adjusted by multiplying such amount by a fraction, the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event. Neither the consolidation of nor merging of the Company with or into any other corporation or corporations, nor the sale or other transfer of all or substantially all of the assets of the Company, will be considered to be a liquidation, dissolution or winding up of the Company within the meaning of this paragraph (d). (e) CONSOLIDATION, MERGER, ETC. If the Company shall enter into any consolidation, merger, combination or other transaction in which the Common Shares are exchanged for or changed into other shares, stock or securities, cash or any other property, then in any such case the Series 1999-A Noncumulative Preferred Shares will at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of shares, stock, securities, or other property, as the case may be, into which or for which each Common Share is changed or exchanged, plus accrued and unpaid dividends, if any, payable with respect to the Series 1999-A Noncumulative Preferred Shares. If the Company at any time after the Rights Declaration Date (i) declares or pays any dividend on Common Shares payable in Common Shares, or (ii) effects a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of Series 1999-A Noncumulative Preferred Shares will be adjusted by multiplying such amount by a fraction, the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event. (f) REDEMPTION. The Series 1999-A Noncumulative Preferred Shares are not redeemable, but the foregoing does not limit the ability of the Company to purchase or otherwise deal in the Series 1999-A Noncumulative Preferred Shares to the extent otherwise permitted hereby and by law. (g) AMENDMENT. The Amended and Restated Articles of Incorporation of the Company, as amended, may not be amended in any manner that would materially alter or change the powers, preferences or special rights of the Series 1999-A Noncumulative Preferred Shares so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding Series 1999-A Noncumulative Preferred Shares, voting separately as a class. 30 (h) FRACTIONAL SHARES. Series 1999-A Noncumulative Preferred Shares may be issued in whole shares or in any fraction of a share that is one one-thousandth (1/1,000th) of a share or any integral multiple of such fraction, which will entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of holders of Series 1999-A Noncumulative Preferred Shares. In lieu of fractional shares, the Company may elect to make a cash payment as provided in that certain Rights Agreement dated as of May 25, 1999, between the Company and National City Bank, a national banking association, as rights agent, for fractions of a share smaller than one one-thousandth (1/1,000th) of a share or any integral multiple thereof. IN WITNESS WHEREOF, we have executed this instrument in one or more counterparts as of June 9, 1999. BOYKIN LODGING COMPANY, an Ohio corporation /s/ Paul A. O'Neil Paul A. O'Neil, Treasurer /s/ Andrew A. Alexander Andrew A. Alexander, Assistant Secretary 31 EX-4.2 3 EXHIBIT 4.2 Exhibit 4.2 BOYKIN LODGING COMPANY DIVIDEND REINVESTMENT AND OPTIONAL SHARE PURCHASE PLAN 1. PURPOSE AND ADMINISTRATION. This Dividend Reinvestment and Optional Share Purchase Plan (the "Plan") provides the shareholders of Boykin Lodging Company (the "Company") an opportunity to automatically invest their cash dividends on their Common Shares, without par value, of the Company ("Common Shares") in additional Common Shares, and to make monthly or other voluntary cash investments in Common Shares. The Company will pay the cost of the administration of the Plan. Persons who are not already shareholders of the Company may purchase Common Shares under the Plan through voluntary cash investments. The Company may issue not more than 2,500,000 Common Shares under the Plan. The Plan will be administered by National City Bank, transfer agent for the Company. National City Bank or any successor administrator of the Plan is referred to as the "Agent." 2. ELIGIBILITY. Except as otherwise provided in this Section 2, only shareholders of record of the Company ("Record Holders") who complete and return an Authorization Card to the Agent are eligible to become participants ("Participants") in the Plan. Beneficial owners of Common Shares (i.e., persons whose Common Shares are held on their behalf by a nominee, such as a bank or a brokerage firm) are not Record Holders and must have one or more Common Shares transferred into their names on the share records of the Company in order to become Participants. Other persons may become Participants by completing and returning an Authorization Card to the Agent and making an initial purchase of Common Shares through a voluntary cash investment. 3. PURCHASE OF COMMON SHARES. The Agent's purchases of Common Shares for the Plan may be made, at the Company's option, either (i) from the Company out of its authorized but unissued Common Shares, or (ii) in the open market (on the New York Stock Exchange or any securities exchange where the Common Shares are then traded, in the over-the-counter market or in negotiated transactions). The Company may change its designation as to whether Common Shares will be purchased from the Company or in the open market only once in any three-month period. The Company will pay the brokerage fees or commissions related to the Agent's purchases of Common Shares in the open market. In making purchases of Common Shares, the Agent may commingle the Participants' funds. The Agent will purchase Common Shares to be purchased in the open market on or as promptly as practicable after the applicable Investment Date (defined below), consistent with any applicable securities laws and market conditions, and, in any event, dividends and voluntary cash investments will be invested within 30 days after receipt by the Agent except when applicable laws or regulations require otherwise. The exact timing of open market purchases, including determining the number of Common Shares, if any, to be purchased on any day or at any time of day, the prices paid for such shares, the markets on which such purchases are made, and the persons (including brokers and dealers) from or through whom such purchases are made will be determined by the Agent or the broker selected by it for that purpose. The Agent may purchase Common Shares in advance of an Investment Date for settlement on or after such date. No interest will be paid on funds held by the Agent pending investment. The Agent may hold Common Shares of all Participants on deposit in its name or in the name of its nominee. The Agent is not responsible for the value of Common Shares acquired for the Participant's account. If the Agent is unable to invest dividend payments or funds received for voluntary cash investments in accordance with the guidelines of the Plan, voluntary cash investments will be returned within 35 days after receipt by the Agent and dividend payments will be returned within 35 days after the applicable dividend payment date. The Agent has no liability for conditions that prevent the purchase of Common Shares or interfere with the timing of purchases. 4. DIVIDEND REINVESTMENT. As the Participant's agent, the Agent will receive, on or before each dividend payment date, cash from the Company equal to the dividend on the participating Common Shares, including any fractional Common Share (computed to three decimal places) held by the Participant. The Agent will apply such funds (subject to tax withholding requirements, as described in Section 9) toward the purchase of Common Shares for the Participant's account. A Participant may direct the Agent to reinvest dividends on some but not all of his or her Common Shares. The purchase price per share to the Participant for Common Shares purchased by the Agent for the Plan with reinvested dividends will be 98% (subject to change) of the Market Price for the applicable Investment Date. The number of Common Shares credited to a Participant's account on each purchase of Common Shares with reinvested dividends will be the number (computed to three decimal places) resulting from dividing the Participant's aggregate dividends invested by 98% (subject to change) of the Market Price for the applicable Investment Date. The "Market Price" will be, (a) with respect to Common Shares purchased from the Company, the average of the daily high and low sale prices of Common Shares on the New York Stock Exchange for the ten trading days immediately preceding the applicable Investment Date, and (b) with respect to Common Shares purchased in the open market or in negotiated transactions, the weighted average price of all Common Shares purchased under the Plan on the applicable Investment Date. The "Investment Date," with respect to all funds received as cash dividends from the Company, will be the dividend payment date declared by the Company for those payments from time to time. The Investment Date, with respect to voluntary cash investments, will be once per month on (i) the dividend payment date for any month in which the Company pays a cash dividend and (ii) for any month in which no cash dividend is paid, the tenth day of that month or the next business day if the tenth day is not a business day. A business day is any day on which both the Agent and the New York Stock Exchange are open. Page 2 The Agent must receive authorization for any reinvestment of dividends at least one day prior to the record date for payment of those dividends; otherwise, such authorization will not be effective until the Investment Date following the next dividend record date. 5. VOLUNTARY CASH INVESTMENT. As the Participant's agent, the Agent may receive monthly or other (as determined by the Participant) voluntary cash investments. The Agent will apply such funds toward the purchase of Common Shares for the Participant's account. Voluntary cash investments received by the Agent at least eleven business days prior to an applicable Investment Date will be invested on or as promptly as practicable after the applicable Investment Date. The purchase price per share to the Participant for Common Shares purchased by the Agent for the Plan with voluntary cash investments will be 98% (subject to change) of the Market Price for the applicable Investment Date, and the purchase price per share to a person making an initial purchase of Common Shares pursuant to the Plan for Common Shares purchased by the Agent for the Plan will be 100% of the Market Price for the applicable Investment Date. The number of Common Shares credited to a Participant's account on each purchase of Common Shares with voluntary cash investments will be the number (computed to three decimal places) resulting from dividing the Participant's voluntary cash investment by 98% (subject to change) of the Market Price for the applicable Investment Date. The number of Common Shares credited to the account of a person making an initial purchase of Common Shares pursuant to the Plan will be the number (computed to three decimal places) resulting from dividing that person's voluntary cash investment by 100% of the Market Price for the applicable Investment Date. Subject to Section 7 below, any voluntary cash investment by a Participant may not be less than $50 nor more than $5,000 in the aggregate in any month, and any voluntary cash investment by a person making an initial purchase of Common Shares pursuant to the Plan may not be less than $2,000 nor more than $5,000 in the aggregate. No interest will be paid on funds held by the Agent prior to investment. Voluntary cash investments received by the Agent will be returned to the Participant (or first-time purchasers) upon written request received by the Agent at least four business days prior to the applicable Investment Date. 6. DISCOUNTS AND COMMISSIONS. The discount per share from the Market Price for either a dividend reinvestment or a voluntary cash investment is subject to change (but will not vary from the range of 0% to 5%) from time to time at the Company's sole discretion after a review of current market conditions, the level of participation in the Plan and the Company's current and projected capital needs. The Agent will provide Participants with prompt written notice of any change in the discount. In no event may the combined discount from the Market Price and brokerage fees or commissions per share for Common Shares credited to a Participant's account exceed 5% of the Market Price on the applicable Investment Date, and the Agent is authorized to adjust the discount from the Market Price to ensure that that limit is not exceeded. Page 3 For each Investment Date for which the Agent is directed to purchase Common Shares in the open market, the Company will pay the Agent an amount equal to the amount of the aggregate discounts per share (if any) from the Market Price. 7. PERMITTED PAYMENTS IN EXCESS OF LIMITS. Voluntary cash investments in excess of $5,000 may be made by a Participant only upon the prior approval by the Company of a waiver purchase form (a "Waiver Purchase Form") from such Participant. At the Company's sole discretion, voluntary cash investments pursuant to a Waiver Purchase Form request may be made at a discount of from 0% to 5% of the Market Price. The Company reserves the right to review and adjust the discount relating to Waiver Purchase Form requests at any time. The Waiver Purchase Form may require the requesting Participant to represent, among other things, that the Participant is not purchasing the Common Shares to engage in arbitrage activities and will not sell Common Shares during any applicable ten-day pricing period. No maximum limit applies to voluntary cash investments that may be made pursuant to a Waiver Purchase Form request. Notwithstanding the above, no Participant may acquire more than 9% of the outstanding Common Shares. A Waiver Purchase Form request will be considered on the basis of a variety of factors, including: the Company's current and projected capital requirements, the alternatives available to the Company to meet those requirements, prevailing market prices for Common Shares, general economic and market conditions, expected aberrations in the price or trading volume of Common Shares, the number of Common Shares held by the Participant submitting the Waiver Purchase Form, the aggregate amount of voluntary cash investments for which such Waiver Purchase Forms have been submitted, and the administrative constraints associated with granting such Waiver Purchase Form request. Any grant of permission to purchase Common Shares in excess of $5,000 per month will be made in the sole discretion of the Company. The Company may establish for each Investment Date a threshold Common Share purchase price (the "Threshold Price") which applies only to voluntary cash investments made pursuant to a Waiver Purchase Form request. The Threshold Price will be a stated dollar amount that the Market Price of the Common Shares for the respective Investment Date must equal or exceed in order for the Agent to make any purchases pursuant to a Waiver Purchase Form request. The Threshold Price will initially be established by the Company at least ten business days prior to the applicable Investment Date; however, the Company reserves the right to change the Threshold Price at any time. The Threshold Price will be determined in the Company's sole discretion after a review of current market conditions and other relevant factors. If the Threshold Price is not met for the applicable Investment Date, each Participant's voluntary cash investments made pursuant to a Waiver Purchase Form for that Investment Date will be returned, without interest, to the Participant. Setting a Threshold Price for an Investment Date will not affect the setting of a Threshold Price for any subsequent Investment Date. Page 4 8. ACCOUNTS. As soon as practicable after the purchase of Common Shares on any Investment Date, the Agent will send to each Participant a statement of account confirming that Participant's transactions and itemizing that Participant's investment and reinvestment activity for the calendar year. Common Shares credited to a Participant's account may not be pledged or assigned, and any attempted pledge or assignment is void. A Participant who wishes to pledge or assign Common Shares credited to the Participant's account must first withdraw the Common Shares from the account. 9. INCOME TAX. The reinvestment of dividends does not relieve a Participant of any income tax which may be payable on the dividends. In the case of both foreign Participants who elect to have their dividends reinvested (and whose dividends are subject to United States income tax withholding) and other Participants who elect to have their dividends reinvested (and who are subject to "backup" withholding under Section 3406(a)(1) of the Internal Revenue Code of 1986, as amended, (the "Code")), the Agent will invest in Common Shares in an amount equal to the dividends of the Participants, less the amount of tax required to be withheld. To the extent required under federal tax law, Participants will be treated as having received a distribution to which Section 301 of the Code applies with respect to (i) brokerage fees or commissions paid by the Company to acquire Common Shares for the Participant and (ii) the dollar value of the discount applicable to such acquisitions. 10. VOTING. The Participant may vote all Common Shares credited to a Participant's account under the Plan. If on the record date for a meeting of shareholders there are Common Shares credited to the account of a Participant, the Agent will send to that Participant the proxy material for the meeting and a proxy covering the Participant's shares credited to the Participant's account. 11. CERTIFICATES. Common Shares purchased under the Plan are registered in the name of a nominee and shown on each Participant's account. However, a Participant may request in writing a certificate for any of the whole Common Shares that have accumulated in the Participant's account. Each certificate issued is registered in the name or names in which the account is maintained, unless the Participant otherwise instructs the Agent in writing. If the certificate is to be issued in a name other than the name of the Plan account, the Participant or Participants must have his, her or their signatures guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities Act of 1933, as amended. Certificates for fractional shares will not be issued. Dividends will be paid on the cumulative holdings of both full and fractional Common Shares remaining in the Participant's account and will be reinvested in accordance with the elections made by the Participant in accordance with Page 5 the Plan. Participants may deposit certificates for Common Shares registered in their names with the Agent for credit under the Plan. There is no charge for such deposits. Dividends on Common Shares deposited with the Agent will be reinvested. 12. TERMINATION OF PARTICIPATION. A Participant may terminate his or her account at any time by notifying the Agent in writing. Unless the Agent receives the termination notice at least five days prior to any dividend record date, it will not be processed until after purchases made from the dividends paid with respect to that record date have been completed and credited to the Participant's account. All dividends with a record date after timely receipt of notice for termination will be sent directly to the Participant. In addition, upon instructions from the Company, the Agent may terminate the account of any Participant by written notice mailed to the Participant. Within 14 days after mailing the termination notice, the Agent will issue to the Participant, without charge, a certificate for the full Common Shares held in the Participant's account or, if the Participant so requests the Agent in writing or by telephone before the Agent's issuance of a certificate, the Agent will sell the full Common Shares held in the Participant's account, deduct brokerage commissions, transfer taxes (if any) and a service charge, and deliver the proceeds to the Participant. In every case of termination, the Participant's interest in any fractional Common Share will be paid in cash at the market value of the Company's Common Shares existing on the date the termination becomes effective as determined by the Agent. A Participant will also be entitled to the uninvested portion of any voluntary investment if notice of termination is received at least two business days prior to the date when the Agent becomes obligated to pay for Common Shares purchased with respect to that investment. If a Participant disposes of all of the Common Shares registered in his or her name on the books and records of the Company, the Participant will remain in the Plan with respect to any Common Shares held in the Participant's account under the Plan unless the Participant provides written notice of termination to the Agent. 13. SHARE DIVIDENDS. Any share dividends or share splits distributed by the Company on the Common Shares held by the Agent for the Participant will be credited to the Participant's account. If the Company makes available to its shareholders rights to purchase additional Common Shares or other securities, the Agent will send to the Participant appropriate instructions in connection with all such rights in order to permit the Participant to determine what action he or she desires to take. 14. RESPONSIBILITY OF AGENT. The Agent is not liable hereunder for any act done in good faith, or for any good faith omission to act, including, without limitation, for: (i) any failure to terminate any Participant's account upon the Participant's death prior to receipt of notice in writing of his or her death, and (ii) the prices and times at which it purchases or sells Common Shares for any Participant's account. Page 6 15. AMENDMENT OF PLAN. The Company may amend or supplement the Plan at any time, but, except when necessary or appropriate to comply with law or the rules or regulations of the Securities and Exchange Commission (the "Commission"), the Internal Revenue Service or other regulatory authority or with respect to any modification or amendment that does not materially affect the rights of Participants, any amendment or supplement will be effective only upon the mailing of written notice thereof at least 30 days prior to the effective date thereof to each Participant. The amendment or supplement will be considered to be accepted by the Participant unless, prior to the effective date thereof, the Agent receives written notice of the termination of the Participant's account. Any such amendment may include an appointment by the Company of a successor Agent, in which event the Company is authorized to pay the successor Agent for the account of the Participant all dividends and distributions payable on Common Shares held by the Participant for application by the successor Agent as provided in the Plan. 16. SUSPENSION, TERMINATION AND COMPANY DISCRETION. The Company reserves the right to suspend or terminate the Plan at any time, and reserves the right to refuse voluntary cash investments from any person who, in the sole judgment of the Company, is attempting to circumvent the interests of the Plan by making excessive voluntary cash investments through multiple accounts or by engaging in arbitrage activities. The Company may also suspend, terminate or refuse participation in the Plan to any person if participation or any increase in the number of Common Shares held by such person would, in the sole judgment of the Company, jeopardize the status of the Company as a real estate investment trust. 17. COMPLIANCE WITH APPLICABLE LAW AND REGULATIONS. (a) The Company's obligation to offer or sell Common Shares hereunder is subject to the Company's obtaining any necessary approval, authorization or consent from any regulatory authority having jurisdiction over that offer and sale. The Company may elect not to offer or sell Common Shares hereunder to persons residing in any jurisdiction where, in the sole judgment of the Company, the burden or expense of compliance with applicable blue sky or securities laws makes that offer or sale impracticable or inadvisable. (b) To the extent required to comply with law or the rules and regulations of the Commission, neither the Company nor any "affiliated" purchaser (as defined under the Securities Exchange Act of 1934, as amended) shall purchase any Common Shares on any day on which the market price of the Common Shares will be a factor in determining the Market Price as provided in Section 4 of the Plan. Page 7 18. INTERPRETATION. The Company will determine any questions of interpretation arising under the Plan, and that determination will be final. The Company may adopt rules and regulations to facilitate the administration of the Plan. The terms and conditions of the Plan will be governed by the laws of the State of Ohio. 19. EFFECTIVE DATE. The effective date of the Plan is March 2, 1999. All correspondence and questions regarding the Plan and any Participant's account should be directed to: National City Bank, Reinvestment Services, P.O. Box 94946, Cleveland, Ohio 44101-4946, telephone number: 800-622-6757, or such other address or telephone number of which notice is given to Participants in writing. Page 8 EX-27 4 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF BOYKIN LODGING COMPANY AS OF JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 2,170 0 10,625 0 0 0 641,119 (46,848) 614,756 0 293,000 0 0 0 280,170 614,756 0 43,409 0 22,719 976 0 10,301 9,413 0 9,413 0 0 0 9,413 .55 .55 REGISTRANT UTILIZES AN UNCLASSIFIED BALANCE SHEET THEREFORE CURRENT ASSETS AND CURRENT LIABILITIES ARE NOT APPLICABLE.
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